Aberdeen Asset Management PLC Annual Report & Accounts 2001

Contents 3 4 8 17 20 20

Financial Overview Chairman’s Statement Chief Executive’s Review Board of Directors Principal Offices Corporate Information

22 24 28 31 31 32 34 34 35 36 37 59 60

Financial Review Directors’ Report Remuneration Report Statement of Directors’ Responsibilities Auditor’s Report Accounting Policies Consolidated Profit and Loss Account Statement of Total Recognised Gains and Losses Balance Sheets Consolidated Cash Flow Statement Notes to the Accounts Five Year Summary Notice of Meeting

Aberdeen Asset Management PLC is an international investment management group, managing assets for both institutional and retail clients from twenty-two offices around the world. Our goal is to deliver superior and consistent fund performance, across a wide range of asset classes. The main growth in assets under management over the last year has been through acquisition. We have also seen sustained organic growth despite difficult markets, an increasing diversity of distribution channels, and a greater choice of asset styles, supported by a high level of customer service.

Aberdeen Asset Management 1

Aberdeen Asset Management adopts an international perspective in both asset management and distribution. The Group now employs over 1,000 people worldwide, with twenty-two offices in ten countries.

Financial Overview Financial Highlights Turnover Pre-tax profit (before goodwill amortisation and exceptional costs) Earnings per share (before goodwill amortisation and exceptional costs) Dividend per share Assets under management at the year-end

2001

2000

£182.1m

£115.7m

£48.2m

£35.2m

21.12p

16.48p

10.5p

9.5p

£34.7bn

£21.9bn

Dividends per share

Earnings per share

10.50p 9.50p

21.12p

Assets under management (£bn) 34.7

16.48p 21.9 5.50p 16.1

4.50p 3.75p

7.77p

11.7

6.52p

13.1

4.49p

97

98

99

00

01

97

98

99

00

01

97

98

99

00

01

Financial Calendar 18 January 2002 Annual General Meeting 23 January 2002 Payment of final dividend April 2002 Announcement of interim results May 2002 Payment of interim dividend

Website: www.aberdeen-asset.com Aberdeen Asset Management 3

Chairman’s Statement I am pleased to report that, in what has proved to be a challenging year, the Group has grown strongly at all levels. Profit before taxation, goodwill amortisation and exceptional costs at £48.2 million has increased by 37% on 2000 and earnings per share have increased by 28% to 21.12p per share. We are able therefore to recommend a final dividend for the year of 6.65p per share, making a total for the year of 10.5p, an increase of 10.5% over the previous year. This growth has been achieved in a difficult stock market climate, with all main world equity indices down substantially over the year and particularly heavy falls in one of our specialist areas, technology. However, assets under management have grown by £12.8 billion (58%) to £34.7 billion at the year-end, both by new business generation and by acquisition. Total net new business was £19.1 billion for the year, comprising £2.0 billion of organic growth and £17.1 billion from acquisitions. Encouragingly, operating margins have increased to 32.3% from 30.7% as further efficiencies have been introduced across the Group and as we have taken advantage of economies of scale. Acquisitions this year have made a substantial contribution to assets under management. Aberdeen Property Investors (“API”), which joined the Group at the beginning of the year, itself made two further acquisitions this year, Celexa and RREEF (UK). These two businesses added £3.6 billion of property assets, increasing the total assets managed by API to over £6 billion. API is now one of the largest independent managers of third party property assets in Europe. The acquisitions of Murray Johnstone and EquitiLink were also completed early in the year. Both these businesses have exceeded our expectations and are fully integrated into the Group. We now have a considerably stronger distribution and servicing capability in North America and in private equity asset management in the United Kingdom. Indeed, the private equity division has raised £119m of new assets since the Murray Johnstone acquisition. In the second half of the year we entered into a contract to manage approximately £5.5 billion of investment assets for Life Assurance Holdings Corporation (“LAHC”). As part of the consideration, LAHC was allotted 15 million shares in the Company (9.7% of the then existing share capital) and is now our second largest single shareholder. Towards the end of the year we acquired Ivory & Sime Asset Management, now

4 Aberdeen Asset Management

renamed Asset Value Investors, which manages three funds including the £400m flagship investment trust British Empire Securities & General Trust PLC. The team’s value investing style adds to Aberdeen’s range of asset management skills. As a result of these additions and other fund launches over the last few years, we have now become one of the largest managers of investment trusts and closed end funds in the UK. All of these newly acquired businesses have contributed to profits in the current year and will do so for a full year in 2002, just as acquisitions completed in 2000 have only this year contributed for a full year. We continue to seek further suitable acquisitions to build on our existing strengths in unit trusts, closed-end funds, property, institutional funds and private equity. Unit trust sales, a useful barometer of UK retail investor sentiment, achieved £690 million of net inflows over the period. We saw consistent inflows into our fixed interest funds as well as continuing interest in technology as a new asset class, notwithstanding the falls this year. We continue to add high profile third party distribution links to our growing portfolio. Offshore retail fund sales have generally weakened in Europe in line with the industry as a whole but remain in positive territory overall. Other highlights of the year have been organic growth from a number of areas. Our Singapore operation has been successful in attracting over £180 million of new institutional and retail assets. Our closed end fund division saw new fund raisings; these included the launch of Real Estate Opportunities Limited, an £800 million closed end fund listed in London, Dublin and the Channel Islands. We were also delighted with the launch of the C$250 million Aberdeen SCOTS Trust in Canada in June, indicating additional demand for specialist closed end funds in North America. Our closed end funds globally account for £6.4 billion, some 18% of total assets under management. In the UK, the split capital investment trust sector has been severely tested in recent months. Splits or leveraged investment companies account for some £2.7 billion of our assets under management. The effects of falling equity and bond markets on geared vehicles meant that the asset values of many splits fell dramatically in the summer, particularly for those vehicles investing in previously popular asset classes. Some reconstructions, mergers and additional fund raisings have already been

The group has shown rapid growth in recent years through a combination of acquisition and organic growth. 2001 saw the addition of £12.8 billion of net assets under management, adding expertise in new investment styles, as well as broadening our client base.

Chairman’s Statement announced; we believe the impact on Aberdeen group revenues will be limited. During the course of the year, Scottish Provident agreed to merge with Abbey National and as a consequence, Scottish Provident successfully placed its holding of 58.4 million shares in the Company, representing 37% of the shares then in issue. This placing resulted in a major increase in the number of our institutional shareholders, the shares being placed with over fifty institutions. Our new financial year has started quietly and although there has been a recent upturn in equity markets, this needs to be sustained over the long term in order to encourage investor confidence and create the right climate for equity creation and long term asset growth. We remain confident in our business and in our ability to take advantage of opportunities as they become available and on 12 December we announced the launch of a £100 million Convertible Bond issue, of which £59 million is being offered to existing shareholders. Of the net proceeds, £36 million will be used for the purchase of Old Mutual (Isle of Man) Limited, which will greatly enhance the distribution channels for our offshore funds. A further £25 million will be used to repay part of the Group’s bank debt, with the balance available to fund further growth opportunities.

6 Aberdeen Asset Management

Our staff have excelled during a difficult year, responding flexibly to often adverse conditions, and I would like to thank them for their dedication and support. Finally, I would like to welcome new directors appointed during the year: John Wybrew of Windsor Life Assurance Company and Norman Reid, his alternate, Katherine Garrett-Cox, our Chief Investment Officer and Jack Solan, who previously served as an alternate; and to bid farewell to a number of directors: Tony Bushell, who joined the board in 1992 and has made an invaluable contribution, latterly as chairman of the audit committee; Bob Fiondella, who as chairman of The Phoenix Companies, Inc, our largest shareholder, has been an enormous supporter of Aberdeen; Gordon Henderson of Scottish Provident; David McLellan of Murray Johnstone; and John Plumpton, who joined us in 1997 and who has intimated his intention to resign at the AGM on 18 January 2002. I would like to thank them all for their wisdom and good counsel.

CLA Irby Chairman 18 December 2001

In spite of challenging market conditions, 2001 has seen strong performance, particularly from our UK fixed interest teams and from Australasian equities and bonds. With continuing equity market volatility, it is worth noting that our asset profile has substantially changed this year: half the Group’s assets under management today are invested in property and fixed interest securities.

Chief Executive’s Review Strategic Overview The financial year 2001 was very challenging for asset managers with a decline in equity markets worldwide; the FTSE World Index, for example, fell by 28% over the period and many of the newer technology-based markets saw falls of 50% or more. Despite this difficult environment, our total assets under management by the year-end reached £34.7 billion, up 58% on last year. The past year has witnessed considerable international expansion and diversification of our business, both through acquisition and organic growth. As a result, our range of asset management skills has widened and our client base continues to expand. In terms of acquisition, we have significantly increased our direct property capability and added five North American closed-end bond funds through the acquisition of the Australia-based EquitiLink. We have also added a “value” investing capability in the form of Ivory and Sime Asset Management, now renamed Asset Value Investors. The purchase of Themis Investment Management allows us to add an index overlay to certain portfolios. The major acquisitions in the first quarter, Murray Johnstone and EquitiLink, have now successfully been integrated into the Group. With over 180 investment managers in 22 offices globally our business has become increasingly complex. We therefore appointed Katherine Garrett-Cox as Chief Investment Officer in January and are delighted to now welcome her onto the Board. Katherine’s role is to ensure that the Group’s main investment processes are co-ordinated and to ensure that we utilise our infrastructure and investment capability to best effect. Over the year we have seen a steady increase in our institutional business as a result of successful acquisition. The Group services institutional clients predominantly in the US, UK, Ireland, Asia and Australia, with many established clients in each area. Our Singapore office has been particularly successful this year in raising new institutional assets both locally and overseas. Our property subsidiary, Aberdeen Property Investors, has reported considerable success in building its business in Continental Europe. In April, it acquired the assets of the Glasgow-based property asset manager, RREEF (UK) as well as Celexa, which has offices in Stockholm, Oslo, Amsterdam and London. The subsequently renamed Aberdeen Property International Investors manages over £6 billion of property assets across

8 Aberdeen Asset Management

the UK, the Nordic region and Continental Europe. The company is now the largest independent property manager in the UK and is dominant in the Nordic region. As a result of this rapid expansion, property now represents 20% of Group assets under management compared to 4% in 2000. In April, Life Assurance Holding Corporation (“LAHC”), which specialises in the acquisition and rationalisation of life assurance companies and portfolios, agreed terms under which the Aberdeen Group would become the manager, under an exclusive contract, of the investment funds of the LAHC Group, specifically those of its principal subsidiary Windsor Life. These funds totalled approximately £5.5 billion and are expected to generate annual fee income to Aberdeen in excess of £11 million for the first year of the investment management agreement. This exclusive contract is for a period of at least ten years. Aberdeen also acquired the LAHC Group’s associated investment management activities. The contract is complementary to our existing in-house resource, which has managed the Scottish Provident and Century Life assets for many years. Elsewhere in the UK, our specialist funds team has made further developments in our closed end fund business. In recent years, we have been the leading fundraiser in the UK marketplace for this type of fund. At the year-end Aberdeen was ranked first in size, in terms of closed-end funds under management, in the UK market. The Group now holds the investment management contracts for 34 investment companies based in both London and the Channel Islands. Despite our reputation as a manager of split capital trusts, more of which is covered below, some 25 of our closed-end funds, totalling £3.6 billion, are conventionally structured vehicles. These include some of the longest established and larger trusts in the sector, such as Murray International and more recently the £400 million British Empire Securities & General Trust. Our independent fund manager status requires that TYPE OF ASSET UNDER MANAGEMENT

Equities Fixed interest Property Cash

46% 30% 20% 4%

(62%) (32%) (4%) (2%)

we constantly broaden and deepen our distribution channels. In the UK, approximately 75%–80% of our net new business from wholesale and retail sources is sourced through third-party distributors such as Independent Financial Advisers (IFAs), fund supermarkets and life company links. Despite a difficult period for fund sales, Aberdeen Unit Trust Managers has remained one of the UK’s top five providers in terms of net retail sales in the calendar year to September 2001. Retail net sales at £690 million for the year were encouraging in difficult market conditions. Our offshore funds, domiciled in Luxembourg, Dublin and Guernsey, typically attain cross-border distribution through discretionary fund managers and fund-of-fund providers, with additional distribution links to banking groups and other third-party distributors. European cross-border sales for the industry have been very weak recently, and we have not been exempt from this downturn. However, despite cyclical difficulties, we remain confident of the long term secular growth opportunities for funds in Continental Europe. We have a number of global distribution arrangements in place, and the Group now has distribution personnel located in Spain, Austria, Ireland, Hong Kong and the Middle East. The Group’s asset profile is significantly different from this time last year. Half of the assets under management now lie in direct property and fixed interest securities, which should prove beneficial during volatile equity market conditions. Our technology funds, responsible for much of our retail profile in 2000, today account for only 8% of assets under management. On an operational level we have managed to keep costs down despite falling markets. Our operating margin for the year, at 32%, has improved on last year, mainly as a result of economies of scale derived from successful integration. Our discretionary marketing costs have been much reduced following the downturn. However, we remain fully committed to supporting our brand and a much greater proportion of overall marketing spend is dedicated to customer service and client retention. We are also having some success in electronic reporting and communications by using the internet to great effect. Such moves are helping to keep down the high print costs associated with our business as well as introducing more effective measures to maintain our dialogue with investors.

FUNDS PROFILE

Institutional funds 57% Investment trusts 19% and Closed End funds UK unit trusts 17% Offshore funds 4% Private clients 2% Private equity 1%

(47%) (13%) (29%) (8%) (3%)

United Kingdom The integration of Murray Johnstone, which was purchased in the first quarter, has now been completed. We have merged the private equity teams of Aberdeen and Murray Johnstone to form Aberdeen Murray Johnstone Private Equity specialising in deals of between £500,000 and £15 million. We also successfully merged some of the Aberdeen and Murray Johnstone open-ended funds. Our Glasgow operation relocated to new offices which now house the Group’s equity income, global portfolios and property teams. Whilst the retail fund market was adversely affected by a difficult economic environment, Aberdeen’s fixed interest funds continued to achieve good sales, reflecting our role as a leader in fixed interest investment management. During the year, we successfully launched two new theme funds: the £80 million Aberdeen Global Champions Unit Trust followed by the £20 million Aberdeen European Champions Unit Trust. However it has been our bond funds that have continued to appeal to the retail investor during a period of declining interest rates. We were particularly pleased that our Sterling Bond fund won the Investment Week Award for its sector for the second year running. Our investment trust business had another strong year in terms of fund raisings with the launch of the £300 million American Monthly Income Trust and the £800 million Real Estate Opportunities Limited. Since mid-summer, however, many geared investment trusts, particularly in the split capital sector, suffered substantial falls. Our Specialist Funds Team has been actively involved in reconstructions, including additional fund raisings and mergers, in order to remedy weak balance sheets and strengthen the vehicles going forward. There has been much negative press comment during the period. Split capital trusts are an important part of our business, accounting for around 13% of revenues. We manage 18 different split capital companies each with very different

Aberdeen Asset Management 9

Chief Executive’s Review portfolios, risk and structural profiles. Whilst further announcements are expected in the sector as a whole, prices across the sector have recently strengthened. Some of these funds have been indiscriminately marked down after mid-September. The Group’s private equity division launched the Aberdeen Growth VCT fund in February, raising over £24 million by the year-end. Since then it has launched the Aberdeen Growth Opportunities Fund, another venture capital trust. It has also achieved a first closing of a limited partnership of some £60 million in October. Private equity shows continuing promise as an asset class, particularly following the Myners Report earlier this year which may result in further institutional demand in coming years. Our private client division has continued to grow steadily. We have a significant presence across a number of offices in the UK and Jersey, with around £1 billion of assets under management. We have recently announced senior appointments in London where a private trust team has joined us to build a London private client business for the Group. Channel Islands Our business in Jersey has maintained the trend of substantial growth in new assets. The acquisition of EquitiLink during the year added a further £2 billion of closed-end funds. The activities were also marked by the launch of three new funds during the year. These launches added approximately £1.2 billion to the funds under management in Jersey. As a result, June proved to be the most successful month for fund raising in the history of the Aberdeen Group with over £1 billion raised. In September 2001, we also saw the completion of a new private client portfolio and administration system, which provides the foundation for the further growth of the private client operation. This significant investment is already paying dividends. A new account was won by the company shortly after the year-end, which contributes an additional £45 million to client funds. At the year-end, the Jersey office managed over £3.4 billion across 13 funds, thus consolidating its position as one the leading fund management operations in the Channel Islands. Ireland The Dublin office now oversees £800 million of funds under management, a substantial increase

10 Aberdeen Asset Management

over the previous year. The Aberdeen International range of offshore funds, which is domiciled in Dublin has remained in net positive territory despite difficult market conditions. During the year, we took steps to enter the retail funds market in Ireland. Although this fledgling market has been weak in line with the rest of the world, there is no doubting the significantly increased profile these initiatives have afforded us. Elsewhere, we have been actively involved in managing the switch from Irish equities to European equities for institutional clients – including the largest pension fund in Ireland. The Irish economy remains stronger than many and we look forward to building on the firm foundations that we have laid over the last 12 months. Luxembourg During the year, we completed a restructuring and rationalisation exercise in our Luxembourg domiciled offshore fund range, Aberdeen Global Funds. This has resulted in significantly reduced costs and a clearer focus. We have recently concentrated on niche markets and distribution channels within Europe and the Middle East. This strategy has culminated in the formation of excellent new business relationships, most notably in Spain, Austria, the Middle East and Malta. The past year has also seen us establish a physical presence for distribution in Spain and Bahrain. Our on-the-ground presence will assist us in penetrating these important markets in the future. Our principal offshore fund range, Aberdeen Global continues to be the central platform for our longterm strategy of expanding our business in Europe and the Middle East. Asia-Pacific In Singapore, we added former Murray Johnstone staff to both our Asia-Pacific and Japan equity desks. In Sydney, we have gradually streamlined our operating structure, with smaller teams running Australian equities and fixed income. The Asian fixed income desk was transferred to Singapore in February. Our Singapore headquarters now has 15 fund managers and a total of 50 staff, while Sydney has 7 fund managers, out of a total of 35 staff. Despite the downturn, Asian portfolio performance has been very strong. Net new business in Singapore

As an independent asset manager, we aim to identify new distribution opportunities wherever possible. Aberdeen Asset Management has an increasingly diverse range of fund distribution channels, as well as a wide choice of funds, to reach investors all over the world. This means investment is designed and developed to suit local market requirements.

Chief Executive’s Review set a new record, topping US$450 million over the period. More than half of this total came from new segregated institutional accounts investing in regional equities. Meanwhile, retail inflows were positive in the face of stiff competition from structured products both in Singapore and Hong Kong, where we have a sales office. Since the year-end, we agreed to buy a 40% stake in a Thai asset management company. Our intention is to relocate a fund manager to the venture, in order to oversee investment processes and disciplines. Next year, we expect to see the benefits of settled teams across all our offices in Australasia, including the development of new channels of distribution and sharper product focus. North America Significant advances have been made by our North American operations in the past year where the acquisitions of Murray Johnstone and EquitiLink have made a major impact. The former EquitiLink closed-end funds, with an investor base of over 300,000, are now branded under the Aberdeen name. Performance over the past year has held up well in difficult market conditions. Using the extensive list of broker contacts that EquitiLink had built up, we successfully launched a new closed-end fund in Canada. After a series of road shows the Aberdeen SCOTS Trust raised over C$245 million in an initial public offering in June. The new fund has performed well against its peer group and we believe that there may be an opportunity for similar fund raising in future. Canada is also proving to be a fertile ground for our institutional marketing team in Chicago. New mandates have been won, particularly in the area of socially responsible investing. On the offshore marketing front, we were cheered by the news that the Chilean Pension Authorities have given approval for some of our largest Dublin and Luxembourg offshore funds to be included in the list of funds authorised for purchase by Chilean pension funds. We will now be able to market into these and look forward to seeing some positive results as the year progresses. Finally, we are pleased to report that all our New York staff escaped unharmed from the terrorist attacks of September 11, but were understandably shaken given the proximity of the World Trade Center to our office in Manhattan. Nevertheless, our sympathy goes out to all our colleagues in the

12 Aberdeen Asset Management

GEOGRAPHIC PROFILE OF EQUITIES

UK & Ireland 63% (57%) Continental Europe 13% (13%) North America 11% (18%) Asia Pacific ex Japan 6% (6%) Japan 5% (4%) Emerging markets 2% (2%) ex Asia

financial community, and their families, who have suffered as a result of these tragic events. Outlook and Prospects for 2002 The terrorist action against the US on 11 September has deepened and extended the global economic downturn. Having previously assumed an improvement in global production and demand by late 2001, our Global Economics Team now believes this will probably not take place until the second half of 2002. The impact of the terrorist action came at a time when consumer and business confidence had already been eroded by the economic deterioration over the past year. We believe that the negative effect on global equity markets will exacerbate lack of consumer and business confidence in the near term. We expect that investment by corporations will be cut further and that households are going to build up their “just in case” savings. The rapid slowdown or reversal of retail fund flows, particularly in Europe, is evidence of just such uncertainty as investors stay liquid. The positive aspect of this environment on an economic level is that we are now starting to see global monetary policy become more aggressively accommodating. This could continue into 2002. We expect short-term interest rates will be pushed lower and will stay lower over the coming year than current market expectations suggest. This combination of dramatic monetary and fiscal policy relaxation could actually provide a stronger stimulus to global growth later in 2002, leading to a more pronounced bounce in global GDP. In the UK, our core market, we are entering a new regime with the emergence of the Financial Services Authority as the single regulator. We have spent considerable time and resource in preparation for this change. On a broad industry front, we have also seen recommendations from the Myners Report this year that could open up institutional investment opportunities for some of the asset

classes where we have built particular expertise, such as private equity. Relaxation of the constraints of the Minimum Funding Requirement should also open up avenues for our very successful fixed interest teams. We are also seeing some willingness on the part of the Government to consult on pension alternatives to the current system of compulsory annuitisation at 75, which has proven deeply unpopular and inflexible for many savers and investors. Funds held in retirement accounts, as used in the United States, seem a logical alternative to us as well as being complementary to ISAs. Volatile markets and the changing legal and regulatory environment are significant and challenging variables for all fund management companies. Despite persistent market weakness recently, we are confident that the inherent attractions of equity investment remain intact. The need for individuals across the world to make greater provision for their retirement remains imperative, despite the cyclical peaks and troughs of product demand and short-term market rises and falls. At Aberdeen Asset Management, our challenge is to continue to be flexible and

responsive to demand and change. This year we have succeeded in this, and have rounded our overall offering of services to clients, as well as building more solid foundations for our business going forward. The purchase of Old Mutual International (Isle of Man), which was announced on 12 December, will increase our distribution channels by enabling us to provide a life assurance wrapper for our offshore fund range. This transaction will be funded from an issue of Convertible Bonds, which will raise approximately £97 million after expenses. The balance of the funds raised will be used to repay £25 million of bank debt and to pursue additional earnings enhancing acquisitions and strategic opportunities as well as continued organic growth.

Martin Gilbert Chief Executive 18 December 2001

Aberdeen Asset Management 13

A worldwide network of offices

North America Aberdeen Fund Managers, Inc Our Chicago and New York offices market specialist mandates to US institutional and retail investors. The Fort Lauderdale office manages over £140 million of Latin American funds on behalf of UK institutional and retail investors. The San Francisco office manages Technology and US equities.

United Kingdom Aberdeen Asset Managers Limited Our London office, manages UK, US and European equities, global bonds and a number of specialist areas, including technology and emerging markets. Investments in private equities are managed from our offices in Aberdeen, Birmingham, Glasgow, Inverness, Leeds, London and Manchester. Investments for UK private clients are managed from Aberdeen, Edinburgh and Glasgow.

Aberdeen Property Managers Limited The Group manages over £4.5 billion of property assets from offices in Edinburgh and London.

Aberdeen Unit Trust Managers Limited Unit trust dealing and customer service calls are handled in Aberdeen, broker desk service in London

Europe and Middle East

Asia-Pacific

Aberdeen Asset Management Ireland Limited

Aberdeen Asset Management Asia Limited

Our Dublin office manages over £0.8 billion in Irish equities and fixed interest

The Singapore office manages over £3.5 billion of Asia-Pacific

securities.The Aberdeen International Fund, with 15 sub-funds, is also based in

equities and fixed interest securities in the region. Our Singapore

Dublin.

office also markets the Aberdeen Select range of 13 unit trusts to

Aberdeen Asset Managers Jersey Limited Aberdeen Graham Asset Management Limited The Jersey office is the investment advisor to six offshore closed-end funds, with assets in excess of £1.1 billion. Aberdeen Graham is Jersey’s second largest independent asset manager specialising in offshore private clients.

Aberdeen Celexa Property Investors Limited Continental European property assets are managed from Amsterdam and Stockholm.

Aberdeen Investment Services S.A. The Aberdeen Global Fund, with 19 sub-funds, is domiciled in Luxembourg.

Aberdeen Asset Managers Limited The Group maintains a representative office in Bahrain.

Singaporean retail investors. Our Hong Kong office markets offshore funds to the north Asia region.

Aberdeen Asset Management Limited The Sydney office manages six North American closed-end funds investing principally in Asia-Pacific equities and fixed interest securities. The office also manages a number of Australian investment funds and portfolios of Australian and New Zealand institutional investors.

The Group is committed to the highest levels of service. In the retail market, the Group manages funds for over 1,000,000 investors worldwide. Our UK Customer Services Department is staffed by a team of 200, who answer over 750,000 enquiries a year from investors and their advisers.

Board of Directors Charles Irby FCA 1,2,3,4 Chairman Mr Irby (56) was appointed to the Board in August 1999, and became Chairman on 14 January 2000. A chartered accountant, he is a non-executive director of QBE Insurance Group Limited and of EC Harris. He is a member of Council of King Edward VII Hospital, Sister Agnes and was formerly a managing director of ING Barings.

Martin Gilbert MA LLB LLD CA1 Chief Executive A founding Director and shareholder of the Company, Mr Gilbert (46) is Chief Executive of Aberdeen Asset Management PLC and Chairman of the group’s fund management subsidiary. He sits on several investment trust boards as well as being chairman of FirstGroup PLC and a director of Lombard International Assurance SA.

Ronald Scott Brown MA LLB LLD 1 Deputy Chairman Mr Scott Brown (64) is a founding Director and shareholder of the Company. Currently a Deputy Chairman, he is also Chairman of the Nominations Committee. He is chairman of Temple Bar Investment Trust PLC and a director of other investment trusts.

Andrew Laing MA LLB Chief Operating Officer Mr Laing (49), who joined the Group in 1986 to manage its private equity funds, was appointed to the Board in October 1987 and is currently Chief Operating Officer. He is also Chief Executive of Aberdeen Unit Trust Managers Ltd and a director of other Group subsidiary companies.

David Woods MA MSC FIA 1 Deputy Chairman Director of Strategy and Business Development for Abbey National Financial and Investment Services, Mr Woods (53) is a Deputy Chairman of Aberdeen Asset Management PLC. Appointed to the Board in September 1997, he is also chairman of Edinburgh Java Trust PLC and a non-executive director of Capital Opportunities Trust PLC and The Moller Centre for Continuing Education.

Bill Rattray MA CA Finance Director Mr Rattray (43) joined the Group in 1985 as Company Secretary and subsequently became Group Financial Controller. He was appointed Finance Director of Aberdeen Asset Management PLC in January 1991.

Clive Gilchrist BSC (ECON) ASIP FSI 3,4 Senior Independent Director Mr Gilchrist (51) was appointed to the Board in May 1991. He is managing director of BESTrustees PLC, an independent pension fund trustee company. He holds a number of non-executive directorships including British Empire Securities and General Trust PLC. Mr Gilchrist is Chairman of the Remuneration Committee and Senior Independent Director.

Katherine Garrett-Cox Chief Investment Officer Mrs Garrett-Cox (34) was appointed to the Board in December 2001. Having joined the Group in September 2000 she is currently Chief Investment Officer. She also sits on the Board of Aberdeen Asset Managers Limited.

Aberdeen Asset Management 17

Board of Directors Anthony Bushell 2,4 Non-Executive Director Formerly Chief Investment Manager of the Bank of England, Mr Bushell (69) joined the Board of Aberdeen Asset Management PLC in April 1992 and is the Chairman of the Audit Committee. He is also a director of Australian Opportunities Investment Trust PLC and Lloyds Smaller Companies Investment Trust PLC.

Gary Marshall BSC (HONS) FFA Executive Director Mr Marshall (40), who joined the Group in September 1997, was appointed to the Board in December 1999 and is in overall charge of the Group’s sales and marketing function as well as being managing director of Aberdeen Unit Trust Managers Ltd and sitting on the Board of Aberdeen International Fund PLC.

Christopher Fishwick FSI (DIP) Executive Director Mr Fishwick (40) joined the group in 1991 and was appointed to the Board in October 1995. He is responsible for investments in smaller companies. and the management of specialist funds. He is a Director of several investment trusts.

John Plumpton FIA Executive Director Mr Plumpton (50), who joined the Board in 1997, acts as a deputy to the Chief Investment Officer, and is responsible for performance measurement and servicing a number of large institutional clients. He also serves on several asset allocation and strategy committees as well as the Executive and other management committees. He is a fellow of the Institute of Actuaries.

Bev Hendry MA CA Executive Director Mr Hendry (48) joined the Group in 1987 and is Vice President and Chief Executive Officer of Aberdeen Fund Managers, Inc. He was appointed a Director of Aberdeen Asset Management PLC in June 1991 and is a director of American Monthly Income Trust Ltd. Susan Murray 2,4 Non-Executive Director Mrs Murray (44) joined the Board in August 2000. She is Executive Group Sales and Marketing director of the Littlewoods Organisation Plc and a director of the Home Shopping Channel Ltd. She previously worked with Diageo PLC.

Philip McLoughlin Non-Executive Director Mr McLoughlin (55) is Director, Executive Vice President and Chief Investment Officer of The Phoenix Companies, Inc. He was appointed to the Board in September 1997. He is Chairman and Chief Executive Officer of Phoenix Investment Partners, Ltd and a director of a number of other companies.

18 Aberdeen Asset Management

The Rt. Hon. Sir Malcolm Rifkind KCMG QC 3,4 Non-Executive Director Sir Malcolm (55) joined the Board in August 2000. He is a non-executive Director of British Assets Trust plc, Foreign and Colonial Emerging Markets Investment Trust plc and Ramco Energy plc and a consultant to BHP and PricewaterhouseCoopers. John Solan CPA 2 Non-Executive Director Mr Solan (62) joined the Board in August 1999 as an Alternate Director and subsequently became a Director following Mr Fiondella’s resignation in August 2001. He is Senior Vice President of The Phoenix Companies, Inc. Donald Waters OBE CA 2,4 Non-Executive Director Mr Waters (64) was appointed to the Board on 1 February 2000. He is a director of Scottish Media Group PLC, James Johnston and Co of Elgin Ltd and sits on the Scottish Board of Consignia.

Giles Weaver SCA Non-Executive Director Mr Weaver (55) was appointed to the Board in December 2000. He is also a director of Atrium Underwriting PLC, Helical Bar PLC, James Finlay Limited and several investment trusts. John Wybrew FIA ASA FBIM 2 Non-Executive Director Mr Wybrew (58) was appointed to the Board in October 2001. He is chairman and managing director of Windsor Life Assurance Company Ltd and director of a number of associated financial services companies. Hugh Young BA Executive Director Managing Director of Aberdeen Asset Management Asia Limited, Mr Young (43) was appointed a Director of Aberdeen Asset Management PLC in June 1991. He is also a director of several investment trusts and a number of other companies.

Norman Reid

LLB CA

(Alternate Director to Mr Wybrew)

Mr Reid (53) was nominated as an Alternate Director to John Wybrew in October 2001. He is Group Finance Director and Company Secretary of Life Assurance Holding Corporation Limited and director of a number of associated financial services companies. Member of the Nominations Committee Member of the Audit Committee 3 Member of the Remuneration Committee 4 Independent Director 1 2

Aberdeen Asset Management 19

Principal Offices United Kingdom and Channel Islands

Europe

Aberdeen Asset Management PLC One Albyn Place, Aberdeen AB10 1YG Tel: +44 (0) 1224 631999 Fax: +44 (0) 1224 647010

Aberdeen Asset Management Ireland Limited 25 St. Stephens Green, Dublin 2, Republic of Ireland Tel: +353 1 613 0140 Fax: +353 1 676 1812

Aberdeen Asset Managers Limited 123 St Vincent Street, Glasgow, G2 5EA Tel: +44 (0) 141 306 7400 Fax: +44 (0) 141 306 7401

Aberdeen Celexa Property Investors Continental Europe BV Concertgebouwplein 11, PO Box 75035, 1070 AA Amsterdam, The Netherlands Tel: +31 20 577 7666 Fax: +31 20 671 7476

Aberdeen Asset Managers Limited One Bow Churchyard, Cheapside, London EC4M 9HH Tel: +44 (0) 20 7463 6000 Fax: +44 (0) 20 7463 6001 Aberdeen Graham Asset Management Limited One Seaton Place, St. Helier, Jersey JE4 8YJ Tel: +44 (0) 1534 758847 Fax: +44 (0) 1534 767084 Aberdeen Murray Johnstone Private Equity 55 Spring Gardens, Manchester M2 2BY Tel: +44 (0) 161 236 2288 Fax: +44 (0) 161 236 5539 Aberdeen Property Investors International Limited Charles House, 5-11 Regent Street, London, SW1Y 4LR Tel: +44 (0) 20 7747 1700 Fax: +44 (0) 20 7839 7460

Aberdeen Celexa Property Investors Nordic Region AB Luntmakargatan 34, Box 3039, 103 63 Stockholm, Sweden Tel: +46 8412 8000 Fax: +46 8412 8004 Aberdeen International Management Ireland Limited 13 Exchange Place, International Financial Services Centre, Dublin 1, Republic of Ireland Tel: +353 1 670 2115 Fax: +353 1 670 2149 Aberdeen Investment Services SA 21 Avenue de la Liberté, L-1931 Luxembourg Tel: +352 295 494 1 Fax: +352 295 494 20

Asia-Pacific Aberdeen Asset Management Asia Limited 21 Church Street, #01-01 Capital Square Two, Singapore 049480 Tel: +65 395 2700 Fax: +65 535 7159 Aberdeen Asset Management Limited Level 3, 190 George Street, Sydney, NSW 2000, Australia Tel +61 2 9950 2888 Fax +61 2 9950 2800 Aberdeen International Fund Managers Limited Room 2201-2 Wheelock House, 20 Pedder Street, Central, Hong Kong, China Tel: +852 2103 4700 Fax: +852 2827 8908

United States of America Aberdeen Fund Managers, Inc 300 S.E. 2nd Street, Suite #820, Fort Lauderdale, Florida 33301, USA Tel: +(1) 954 767 9900 Fax: +(1) 954 767 6006 Suite 3600, 55 East Monroe, Chicago, Illinois 60603, USA Tel: +(1) 312 630 4622 Fax: +(1) 312 630 2466 45 Broadway, 31st Floor, New York, NY 10006, USA Tel: +(1) 212 968 8800 Fax: +(1) 212968 8888

Details of other office locations can be found on the Group’s website at www.aberdeen-asset.com

Corporate Information Auditors KPMG Audit Plc Chartered Accountants 37 Albyn Place Aberdeen AB10 1JB

Registrars Lloyds TSB Registrars Scotland PO Box 28448 Finance House, Orchard Brae Edinburgh EH4 1WQ

Bankers Bank of Scotland Corporate Banking 38 Albyn Place Aberdeen AB10 1ZG

Company Secretary Brian Ross

20 Aberdeen Asset Management

Registered Office One Albyn Place Aberdeen AB10 1YG

Registered Number 82015 Stockbrokers Cazenove & Co 12 Tokenhouse Yard London EC2R 7AN HSBC Securities Vintners Place 68 Upper Thames Street London EC4V 3BJ

Aberdeen Asset Management PLC Directors’ Report & Accounts Year ended 30 September 2001

Financial Review The year to 30 September 2001 saw further progress by the Group, with a 58% increase in assets under management, substantial new business flows and a 37% increase in recurring profit before goodwill amortisation. Assets under management The Group’s assets under management increased to £34.7 billion at 30 September 2001, an increase of 58% on the previous year end. This growth, which was achieved despite significant falls in global stock markets, arose as follows: Net new business generated in year Acquisitions Market movements and performance

£bn 2.0 17.1 (6.3) 12.8

Turnover Total turnover for the year increased by 57% to £182.1 million, with over 90% arising from recurring fee income. Management fee income, which is mainly related to the value of assets under management, rose by 77% to £171.7 million. Income from initial charges on unit trusts and other open end funds fell by 45% to £10.4 million this year, reflecting the less buoyant conditions operating in the retail market during 2001. The average rate of income earned on assets under management increased to 0.64% in 2001, compared to 0.61% in 2000. Acquisitions contributed £55.5 million of turnover, with growth in turnover from continuing activities amounting to £10.9 million, an increase of 9% on 2000. Included within the acquired activities were substantial additions to the Group’s direct property assets, which grew to a level of approximately 20% of total assets under management at the year end, up from around 4% a year earlier. Fee income generated by the property division amounted to£19.0 million in the year under review and this will increase in the coming year as the acquisitions made during 2001 contribute a full year’s results for the first time. Operating costs Operating costs for 2001 totalled £123.2 million, of which £35.2 million arose directly as a result of acquisitions during the year. Excluding the effects of acquisitions, operating costs increased by £7.7 million on the previous year mainly due to having a full year’s charge for staff and third party administration in respect of business added during the course of the previous year. Operating costs represented 0.43% of average assets under management, compared to 0.42% in 2000. Exceptional costs and amortisation of goodwill The Group completed eight acquisitions during the year to 30 September 2001, with £339.7 million of goodwill payments. These goodwill amounts are amortised over a 20 year period in accordance with the Group’s accounting policy and, as a result, the charge for amortisation has increased to £12.6 million, compared to £1.3 million last year. Certain non-recurring costs, some £10.9 million, were incurred in the integration and rationalisation of the various businesses acquired and these have been separately disclosed within administrative expenses. Operating profit Operating profit rose by £1.1 million (3%). Excluding the effects of goodwill amortisation and the exceptional costs related to the acquisitions during the year, the underlying operating profit increased by 66% to £58.9 million. The operating margin, excluding the effects of goodwill amortisation and exceptional costs, showed further improvement to 32.3% compared to 30.7% for the year to 30 September 2000 and 27.4% a year earlier. The operating margin was enhanced by the year’s acquisitions which, on a marginal basis, demonstrated a margin of 36.5%, with the margin on continuing activities being 30.5%. Net interest payable Six of the eight acquisitions completed during the year were settled by cash consideration. The interest charge for the year increased to £10.7 million (2000 – £264,000) as a result of new bank borrowings drawn to finance these acquisitions. Taxation The tax charge for the year represents an average rate of 39.0% on the profit before taxation (2000 – 29.0%). Excluding the charge for goodwill amortisation, which is not an allowable deduction for tax purposes, the underlying effective rate 22 Aberdeen Asset Management

of tax is 25.8% (2000 – 27.9%). This reduction in the effective rate has been achieved principally because of the continued growth of the Group’s global operations, with an increased proportion of profits generated from overseas locations which benefit from lower rates of corporate tax. Earnings per share Basic earnings per share, excluding the effects of goodwill amortisation and exceptional costs, have increased by 28% to 21.12p, while diluted EPS, calculated on the same basis, have improved by 26% to 19.49p. Net borrowings The Group had net borrowings of £182.9 million at 30 September 2001, representing a net gearing ratio of 83.9% on shareholders’ funds. Bank term loans of £202.6 million were drawn to fund acquisitions during the year, and instalments of £8.0 million were repaid before the year-end. In addition, £10 million of loan stock was issued as part of the consideration for one acquisition. Financial instruments The Group’s financial instruments, other than derivatives, comprise fixed asset and current asset investments, cash and liquid resources, convertible subordinated loan notes, bank term loans, floating rate guaranteed unsubordinated loan stock, deferred consideration and various items, such as trade debtors, trade creditors, etc that arise from its operations. Details of the Group’s financial assets and financial liabilities are given in note 23 to the accounts. The Group has taken advantage of the exemption allowed under FRS 13 Derivatives and other Financial Instruments and excluded short term debtors and creditors from the disclosures, other than currency risk disclosures of financial instruments. The Group has adopted a policy of minimising exposure to exchange risk arising from assets and liabilities denominated in foreign currencies. The major non-sterling liability is in respect of the Convertible Loan Notes, which are denominated in US dollars. To the extent that this liability is not matched at any time by US dollar assets, the exposure is hedged by means of a currency swap arrangement. Interest is payable on the Convertible Loan Notes at a rate of 7% per annum, fixed until conversion or repayment. The Group has also undertaken a cross-currency interest rate swap, for the period to 30 September 2005, in respect of £100 million of bank term loan borrowings. Under this arrangement the Group pays interest in US dollars at a fixed rate of 5.03% and receives interest at the variable rate of six-month sterling LIBOR. The variable LIBOR rate, plus a margin of 1.25%, is payable to the lenders under the bank term loans. The fixed rate of interest is payable in US dollars from the Group’s US dollar revenues, while the principal amount of the loans remains denominated in sterling. Surplus cash balances are invested in money market deposits and other interest bearing accounts, taking advantage of group offset arrangements, in order to optimise interest income while also retaining flexibility in respect of the Group’s expected cash requirements.

Aberdeen Asset Management 23

Directors’ Report The Directors have pleasure in submitting their annual report and financial statements for the year ended 30 September 2001. Principal activity and business review The principal activity of the Group is the provision of asset management services. Further details of the Group’s performance during the year are given in the Chairman’s Statement on page 4, the Chief Executive’s Review on page 8, the Highlights on page 3 and the Financial Review on page 22. Financial The results for the year are shown in the profit and loss account on page 34. An interim ordinary dividend of 3.85p net per share was paid on 9 June 2001. The Directors recommend a final ordinary dividend of 6.65p net per share, making a total of 10.5p net per ordinary share for the year to 30 September 2001. The total distribution of ordinary dividends for the year to 30 September 2001 is £17,582,000. Preference dividends totalling £1,265,000 were paid and provided during the year. Directors Details of the present Directors of the Company are given on pages 17 to 19. Mr C G H Weaver and Mr A D MacLellan were appointed on 1 December 2000. Mr J Solan, who was appointed on 30 August 2001, Mr J L Wybrew, who was appointed on 11 October 2001 and Mrs K L Garrett-Cox, who was appointed on 3 December 2001, stand for election at the Annual General Meeting. Mr G Henderson and Mr A D MacLellan resigned on 24 May 2001 and Mr R W Fiondella resigned on 30 August 2001. Mr J Plumpton has intimated his intention to resign after the Annual General Meeting. In accordance with the Company’s Articles of Association, Mr C D Fishwick, Mr C M Gilchrist, Mr B Hendry, and Mr W J Rattray retire by rotation and, being eligible, offer themselves for re-election. Messrs Fishwick, Hendry and Rattray have service contracts which are currently subject to two years’ notice of termination by the Company, but have agreed to deeds of amendment under which such notice will reduce to one year with effect from 1 January 2003. Directors’ interests in the share capital of the Company at the year-end were as follows: Ordinary shares of 10p

BENEFICIAL R Scott Brown M J Gilbert A A Laing C D Fishwick W J Rattray H Young B Hendry G R Marshall A F Bushell C L A Irby C M Gilchrist C G H Weaver J Plumpton S E Murray Sir M L Rifkind J Solan D H Waters NON BENEFICIAL A F Bushell

Options

Performance Shares of 50p

2001 Number

2000 Number

2001 Number

2000 Number

2001 Number

2000 Number

3,871,746 3,377,540 1,201,832 1,458,648 553,314 364,251 182,751 101,218 99,742 45,000 17,500 10,000 5,143 2,000 1,000 – 1,000

3,871,746 3,348,057 1,181,615 958,388 545,597 364,034 182,534 101,001 73,393 30,000 15,000 – 1,426 – – – –

– 1,215,000 792,500 1,065,000 490,000 785,000 332,500 342,500 – – – – 300,000 – – – –

– 1,015,000 672,500 1,310,000 370,000 665,000 272,500 272,500 – – – – 300,000 – – – –

– 60,000 40,000 50,000 40,000 60,000 40,000 20,000 – – – – 24,000 – – – –

– 60,000 40,000 50,000 40,000 60,000 40,000 20,000 – – – – 24,000 – – – –

15,000

15,000

–

–

–

–

Following publication of the annual report, Directors’ holdings of ordinary shares will increase as a result of the conversion of 1997 Performance shares. Mr Gilbert will hold 3,627,540 ordinary shares; Mr Fishwick 1,658,648 ordinary shares; Mr Laing 1,351,832 ordinary shares; Mr Rattray 703,314 ordinary shares; Mr Young 614,251 ordinary shares; and Mr Hendry 332,751 ordinary shares. Each of these Directors continues to hold 10,000 1998 Performance shares. 24 Aberdeen Asset Management

Mrs K Garrett-Cox, who was appointed after the year-end, has 235,000 options. Neither Mr Wybrew nor Mr Reid have any interests in the shares of the Company. Substantial interests At 18 December 2001 the Company had been notified of the following interests, other than Directors’, of 3% or more in the ordinary shares: The Phoenix Companies, Inc Schroder Investment Management Limited Life Assurance Holding Corporation Jupiter Asset Management Limited Legal and General Investment Management Limited

Number 38,100,000 15,946,115 15,063,395 8,000,000 5,327,400

% of Class 21.99 9.21 8.70 4.62 3.08

Fixed intangible assets The costs of acquiring the management contracts of additional unit trusts are treated as intangible assets and are stated at the lower of cost and Directors’ valuation, and are subject to an annual impairment review. The Directors are of the opinion that this treatment fairly represents the long-term nature of these assets. No cost is attributed to management contracts resulting from the launch of new trusts by the Group. The Directors are of the opinion that the value of these contracts is in excess of cost. Corporate governance The Listing Rules of the Financial Services Authority require all listed companies to disclose how they have complied with the Combined Code issued by the Committee on Corporate Governance. The Group has complied with the provisions set out in Section 1 of the Combined Code throughout the year to 30 September 2001. Board responsibilities The Board comprises twelve Non-Executive Directors, including the Chairman, and nine Executive Directors and the roles of the Chairman and Chief Executive are separate and clearly defined. The Board considers six of the NonExecutive Directors to be independent and has appointed Mr C M Gilchrist as the Senior Independent Director. Biographical details of Directors can be found on pages 17 to 19. The Board meets eight times each year to review financial performance and strategy and has a formal schedule of matters reserved to it for decision. Board papers, comprising an Agenda and formal Board reports and briefing papers, are sent to the Directors in advance of each meeting. All Directors have access to the advice and services of the Company Secretary and external professional advice, if required, at the Company’s expense. Any new Director appointed by the Board will be provided with appropriate training having regard to any previous experience as a Director of a public company. All Directors have submitted themselves for re-election at intervals of no more than three years. As permitted by the Company’s Articles of Association, one Non-Executive Director has appointed an Alternate Director to attend and vote at meetings which he is unable to attend personally. The appointment of an Alternate Director is subject to approval by the Board and the appointment ceases on the resignation or retirement of the Director who appointed him. Directors appointed during the year are required to seek election at the first Annual General Meeting following their appointment. Board Committees The Board has set up the following three Committees to assist in the execution of its duties. All of these Committees operate on written terms of reference and the Chairman of each Committee reports to the Board. Membership of the Committees is shown in the Directors’ biographies on pages 17 to 19. Audit Committee The Audit Committee is scheduled to meet four times each year and can meet more frequently where business needs require. The role of the Audit Committee is to assist the Board in discharging its duties and responsibilities for financial reporting, corporate governance, internal control and the appointment and remuneration of independent auditors. The Committee’s duties include keeping under review the scope and results of the audit work and its cost effectiveness and the independence and objectivity of the auditors. The Committee also monitors the volume and nature of non-audit services provided by the auditors to ensure that a balance is maintained between objectivity and value added. The Committee is

Aberdeen Asset Management 25

Directors’ Report chaired by an independent Non-Executive Director, Mr A F Bushell, and is supported by four other Non-Executive Directors. The Audit Committee receives regular reports from the external and internal auditors of the Group and can and does request supplementary reports from management to meet the terms of reference of the Committee. Nominations Committee The Board as a whole is responsible for the appointment of new Directors and for nominating them for election by shareholders at their first opportunity after the appointment. The Nominations Committee, comprising a majority of Non-Executive Directors, is chaired by Mr R Scott Brown. The Committee is responsible for recommending new members to the Board for appointment. Remuneration Committee The Remuneration Committee comprises three independent Non-Executive Directors and is chaired by Mr C M Gilchrist. The role of the Remuneration Committee is to monitor, review and recommend the Group’s remuneration policy, as set out in the Remuneration Report on pages 28 to 30, and to recommend to the Board the remuneration packages of the executives and other senior employees of the Group. Relationships with shareholders The Company places a great deal of importance on communication with its shareholders and aims to keep shareholders informed by regular communication with institutional shareholders, analysts and the financial press throughout the year. Annual Reports and Interim Reports are widely distributed to other parties who may have an interest in the Group’s performance and these documents are also made available on the company’s website. Private investors are encouraged to attend the Annual General Meeting at which an opportunity is provided to ask questions and the Chairmen of the Audit Committee and Remuneration Committee are available to answer any questions from shareholders. The Group will continue its policy of announcing the number of proxy votes cast on resolutions at the Annual General Meeting. Internal Control The Board has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness. The internal controls are designed to cover all risks to achieving the company’s objectives including all business, operational, financial and compliance risks. The internal controls are designed to manage rather than eliminate risk of failure to meet business objectives and to provide reasonable, but not absolute, assurance against material misstatement or loss. The system of internal control is embedded within the day to day operations of the Group and a strong control culture is combined with clear management responsibility and accountabilities for individual controls. An automated risk management framework is operated by the Group that requires the executive and management of the Group to record and make regular self assessments of the risks and the effectiveness of internal controls for which they are responsible and report their findings to the Board. The risk management framework also provides a continuous improvement process for the Group’s internal controls. A risk management committee has been established to monitor the effectiveness of the risk management framework and is scheduled to meet six times annually and can meet more regularly where business needs require. The risk management committee includes executive members of the Board and operates under terms of reference agreed by the Board. The risk management framework has been extended to cover businesses acquired during the year in a planned approach as part of integrating the new operations. At the date of approval of these accounts the risk management framework covers all material parts of the Group. The Group has three separate functions which monitor the effectiveness of internal control independently. The Performance Monitoring Department reports on the performance of funds managed by the Group to generally accepted industry standards and also monitors the investment risk profile of funds. The Head of Performance Monitoring reports to the Chief Investment Officer and provides regular reports to the Board. The Compliance Department reviews the effectiveness of controls that ensure compliance with regulatory requirements in each jurisdiction in which the Group operates. The Head of Compliance reports to the Chief Executive and attends and reports at Board meetings. The Internal Audit Department reviews the effectiveness of all significant controls, either by reviewing the methods and findings of the other independent monitoring functions, or by directly auditing the controls operated by management. The Head of Internal Audit reports to the Audit Committee and has unrestricted access to the Chairman of the Audit Committee. A summary of significant risks, key internal controls and findings arising from the risk management framework and the work of the monitoring functions is reported by the Executive annually in a formal annual internal control report to the Board. 26 Aberdeen Asset Management

The Group has complied with the Turnbull Committee’s guidance for directors. Identifying, evaluating and managing the Group’s significant risks is an ongoing process which is regularly reviewed by the Board and has been in place for the year ended 30 September 2001 and up to the date of the approval of these financial statements. Going concern After making enquiries and taking into account the regulatory capital required to be maintained by operating subsidiaries regulated by the Financial Services Authority, and other regulatory bodies, the Board considers that it is appropriate to adopt the going concern basis in preparing these financial statements. Employees The Group places considerable value on the involvement of its employees and has continued its practice of keeping them fully informed on matters affecting them as employees. This is achieved through formal and informal meetings and staff bulletins. The Group’s policy is to offer equal opportunities to all persons applying for employment having due regard to their aptitudes and abilities in relation to the jobs available. It is the Group’s policy to provide employment opportunities to people who are disabled. They are given the same opportunities as other employees to progress within the Group, due allowance being given to their disability, but subject to their having the necessary skills. For any member of staff who becomes disabled, the Group would continue their employment, continue them on disability benefit, or arrange for retraining, as may be appropriate. The environment The Group encourages energy efficiency and avoidance of waste, including recycling of materials and reduction of use of paper through office automation. The Group also promotes high standards of health and safety at work. Charitable contributions During the year, the Group made various charitable contributions totalling £85,000 (2000 – £18,200). It is the Group’s policy not to make contributions for political purposes. Policy on payment of creditors As required by the Financial Services Act, all unit trust repurchase settlements are paid within four working days of receipt of properly renounced certificates. Unless otherwise agreed, payments to other creditors are made within thirty days. At the year-end, the Group and Company had an average of 17 days purchases outstanding in respect of trade creditors and an average of 3 days outstanding in respect of approved unit trust repurchase settlements. Auditors In accordance with Section 385 of the Companies Act 1985, a resolution to reappoint KPMG Audit Plc as auditors of the Company is to be proposed at the forthcoming Annual General Meeting. By order of the Board

Brian Ross Secretary One Albyn Place, Aberdeen AB10 1YG

18 December 2001

Aberdeen Asset Management 27

Remuneration Report The members of the Remuneration committee are shown on pages 17 to 19. Remuneration policy The Group’s remuneration policy is designed to reflect the importance of recruiting and retaining senior executives of the calibre necessary to maintain and improve the Group’s position in the asset management sector. The policy seeks to reward performance in a manner which aligns the interests of executives and shareholders. Executive remuneration comprises basic salary, annual cash bonus, participation in the Group’s discretionary Employee Benefits Trust, Employee Share Ownership Plan, Share Option and Performance Share schemes, and the provision of medical insurance cover. Executives posted overseas are entitled to a local housing allowance. Executives are also entitled to membership of the Group’s contributory money purchase pension scheme to which the employer’s contribution is 15% of basic salary. The aggregate amounts of any cash bonus or benefits from the Employee Benefits Trust available in any year are dependent on the Group’s overall profit performance and net new business generated. Individual bonuses, which are nonpensionable, are discretionary and based on the Remuneration Committee’s assessment of the achievement of objectives. The Remuneration Committee will make requests to the Trustees of the Employee Benefits Trust for the provision of benefits to individuals based on the Committee’s assessment of the achievement of objectives. Individual bonuses and benefits requested for key employees are made on condition that a proportion is either deferred or is repayable in the event of the individual leaving the Group’s employment within the following year. Employee Share Ownership Plan (“ESOP”) The Company has established an Employee Share Ownership Trust pursuant to Sections 66-74 of, and Schedule 5 to, the Finance Act 1989. The beneficiaries include all permanent employees who have been employed by the Group for two years or more. This trust operates in conjunction with an approved profit sharing scheme established in accordance with Section 186 of, and Schedules 9 and 10 to, the Income and Corporation Taxes Act 1988. This scheme allows Group companies to contribute up to 5% of profits for any year for investment in the Company’s shares. Eligible employees participate in the ESOP on an equal basis, regardless of seniority or length of service. Provisions totalling £772,000 have been made for proposed profit sharing contributions in 2001 (2000 – £480,000). The All-Employee Share Ownership Plan (“AESOP”) approved by shareholders at the AGM in 2000 has recently been renamed the Share Incentive Plan (“SIP”) by the Government. SIPs are intended to encourage share ownership by employees. They are designed to be available to all employees, subject to a minimum period of service, and are considered to be the successor to ESOP schemes such as that currently operated by the Group. The Board believes that the introduction of the SIP will enable the Group to motivate staff at all levels in a tax-efficient manner. Share Option Schemes The Group has two Share Option Schemes, both of which are approved by the Inland Revenue. Options are granted at the discretion of the Remuneration Committee and are issued for no consideration. The first of these schemes, which is not subject to any performance criteria, has now passed its 10th anniversary and no further options can therefore be granted. Options granted to executive directors and senior employees under the 1994 Executive Share Option Scheme may only be exercised if the Remuneration Committee is satisfied that earnings per share have increased, over a period of 3 years or longer, by 5% per annum in excess of the average growth in the stock markets in which the Group’s assets under management are invested. An unapproved schedule was added to this scheme in 1999 to permit options to be granted within institutional guidelines but in excess of the reduced limits on approved options imposed by the Government. Executive share options granted during the year were as follows: Number 502,500 52,500 201,750 2,513,250

Price 545p 556p 584p 585p

Performance Share Scheme The Company established a Performance Share Scheme under which executive directors and senior employees may be offered the opportunity to subscribe for Performance Shares at the greater of their nominal value and market value, as determined by the Remuneration Committee on the advice of independent accountants. This scheme was in operation for two years, 1997 and 1998, before changes in UK tax legislation which removed the efficiencies of the scheme. The Performance shares of 50p may convert, wholly or partly, to ordinary shares of 10p at the end of a five year period, provided that the Group’s earnings per share have grown over that period by defined margins in excess of general growth of the markets in which the Group’s assets under management are invested. The growth in EPS for the five year period to 30 September 2001 has been independently verified as surpassing the target of 5% per annum in excess of weighted average stock market growth required to permit the maximum rate of conversion of the 1997 Performance shares. On publication of this Annual Report the 476,000 1997 Performance shares will 28 Aberdeen Asset Management

therefore convert into 1,872,500 ordinary shares, which will vest in individual holders, and 507,500 deferred shares which are valueless and will be cancelled. Service contracts Seven executive directors have service contracts which provide for two years’ notice of termination to be given by the Company. However, the Directors concerned have agreed to deeds of amendment under which such notice period will reduce to one year with effect from 1 January 2003. Directors’ emoluments 2001 Salary & fees £’000 EXECUTIVE Duties within the UK M J Gilbert C D Fishwick A A Laing A D MacLellan G R Marshall J Plumpton W J Rattray Duties outwith the UK B Hendry H Young NON–EXECUTIVE C L A Irby R W Fiondella A F Bushell C M Gilchrist P McLoughlin R Scott Brown D E Woods G Henderson J Solan D H Waters C G H Weaver Rt Hon Sir M Rifkind S E Murray

2000

Total Bonus Other before payments benefits pensions £’000 £’000 £’000

Pension costs £’000

Total £’000

Total before pensions £’000

Pension costs £’000

Total £’000

400 350 250 100 180 180 180

– – – – – – –

652 1,403 277 30 65 78 102

1,052 1,753 527 130 245 258 282

60 53 38 – 27 27 27

1,112 1,806 565 130 272 285 309

827 1,703 422 – 219 272 242

41 31 21 – 18 21 18

868 1,734 443 – 237 293 260

1,640

–

2,607

4,247

232

4,479

3,685

150

3,835

191 299

100 200

7 33

298 532

21 –

319 532

286 484

17 –

303 484

490

300

40

830

21

851

770

17

787

65 23 30 30 25 30 25 17 2 25 21 25 25

– – – – – – – – – – – – –

– – – – – – – – – – – – –

65 23 30 30 25 30 25 17 2 25 21 25 25

– – – – – – – – – – – – –

65 23 30 30 25 30 25 17 2 25 21 25 25

48 10 24 24 18 24 18 18 – 12 – 3 3

– – – – – – – – – – – – –

48 10 24 24 18 24 18 18 – 12 – 3 3

343

–

–

343

–

343

202

–

202

2,473

300

2,647

5,420

253

5,673

4,657

167

4,824

Other benefits includes the value of anticipated benefits from the discretionary Employee Benefits Trust set up for the purpose of providing benefits to staff. A payment of £30,000 to Mr MacLellan in compensation for loss of office is also included within other benefits. Deferred benefits are also expected to be payable to Mr Gilbert (£650,000), Mr Fishwick (£1,400,000), Mr Laing (£275,000), Mr Rattray (£100,000), Mr Young (£200,000), Mr Marshall (£62,500), and Mr Hendry (£100,000), conditional on each individual continuing in the Group’s employment until 30 September 2002. Deferred benefits disclosed in the Annual Report to 30 September 2000 were subsequently paid to Mr Gilbert (£500,000), Mr Fishwick (£1,450,000), Mr Laing (£250,000), Mr Rattray (£100,000) and Mr Marshall (£100,000).

Aberdeen Asset Management 29

Remuneration Report Director’s pension entitlement Pension costs shown above represent the Company’s contributions to the Group’s money purchase pension scheme. Mr MacLellan participated in the Murray Johnstone defined benefit scheme. The accrued pension which would be paid annually on retirement based on service from the date of appointment on 1 December 2000 to the date of resignation on 24 May 2001 is £61,000, an increase of £14,000 in the year. Directors’ interests in share options Date of grant

2000

Number Granted Exercised during year during year

2001

Exercise price

Earliest exercise

Latest exercise

M J Gilbert

30.3.94 9.7.98 20.1.99 8.12.99 26.6.00 5.6.01

150,000 50,000 175,000 240,000 400,000 –

– – – – – 200,000

– – – – – –

150,000 50,000 175,000 240,000 400,000 200,000

91p 121p 101p 261p 531p 585p

Mar 1999 Jul 2003 Jan 2004 Dec 2004 Jun 2003 Jun 2004

Mar 2004 Jul 2008 Jan 2009 Dec 2009 Jun 2010 Jun 2011

C D Fishwick

23.7.93 28.1.94 30.3.94 9.7.98 20.1.99 8.12.99 26.6.00 5.6.01

1,015,000 120,000 125,000 200,000 50,000 175,000 240,000 400,000 –

200,000 – – – – – – – 200,000

– 120,000 125,000 200,000 – – – – –

1,215,000 – – – 50,000 175,000 240,000 400,000 200,000

40p 82p 91p 121p 101p 261p 531p 585p

Jul 1996 Jan 1997 Mar 1999 Jul 2003 Jan 2004 Dec 2004 Jun 2003 Jun 2004

Jul 2003 Jan 2004 Mar 2004 Jul 2008 Jan 2009 Dec 2009 Jun 2010 Jun 2011

A A Laing

30.3.94 9.7.98 20.1.99 8.12.99 26.6.00 5.6.01

1,310,000 112,500 10,000 150,000 200,000 200,000 –

200,000 – – – – – 120,000

445,000 – – – – – –

1,065,000 112,500 10,000 150,000 200,000 200,000 120,000

91p 121p 101p 261p 531p 585p

Mar 1999 Jul 2003 Jan 2004 Dec 2004 Jun 2003 Jun 2004

Mar 2004 Jul 2008 Jan 2009 Dec 2009 Jun 2010 Jun 2011

W J Rattray

30.3.94 9.7.98 20.1.99 8.12.99 26.6.00 5.6.01

672,500 110,000 10,000 75,000 100,000 75,000 –

120,000 – – – – – 120,000

– – – – – – –

792,500 110,000 10,000 75,000 100,000 75,000 120,000

91p 121p 101p 261p 531p 585p

Mar 1999 Jul 2003 Jan 2004 Dec 2004 Jun 2003 Jun 2004

Mar 2004 Jul 2008 Jan 2009 Dec 2009 Jun 2010 Jun 2011

B Hendry

30.3.94 9.7.98 20.1.99 8.12.99 5.6.01

370,000 112,500 10,000 75,000 75,000 –

120,000 – – – – 60,000

– – – – – –

490,000 112,500 10,000 75,000 75,000 60,000

91p 121p 101p 261p 585p

Mar 1999 Jul 2003 Jan 2004 Dec 2004 Jun 2004

Mar 2004 Jul 2008 Jan 2009 Dec 2009 Jun 2011

H Young

9.7.98 20.1.99 8.12.99 26.6.00 5.6.01

272,500 50,000 175,000 240,000 200,000 –

60,000 – – – – 120,000

– – – – – –

332,500 50,000 175,000 240,000 200,000 120,000

121p 101p 261p 531p 585p

Jul 2003 Jan 2004 Dec 2004 Jun 2003 Jun 2004

Jul 2008 Jan 2009 Dec 2009 Jun 2010 Jun 2011

J Plumpton

9.7.98 20.1.99 8.12.99

665,000 50,000 150,000 100,000

120,000 – – –

– – – –

785,000 50,000 150,000 100,000

121p 101p 261p

Jul 2003 Jan 2004 Dec 2004

Jul 2008 Jan 2009 Dec 2009

G R Marshall

9.7.98 20.1.99 8.12.99 26.6.00 5.6.01

300,000 22,500 75,000 100,000 75,000 –

– – – – – 70,000

– – – – – –

300,000 22,500 75,000 100,000 75,000 70,000

121p 101p 261p 531p 585p

Jul 2003 Jan 2004 Dec 2004 Jun 2003 Jun 2004

Jul 2008 Jan 2009 Dec 2009 Jun 2010 Jun 2011

272,500

70,000

–

342,500

During the year Mr Fishwick exercised 445,000 options (2000 – nil) as detailed above. The middle-market price of the ordinary shares at the date of exercise was 599p. The middle-market price of the Company’s ordinary shares at 30 September 2001 was 320p and the range during the year was 235.5p to 705p. 30 Aberdeen Asset Management

Statement of Directors’ Responsibilities Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and Group and of the profit or loss for that period. In preparing those financial statements, the Directors are required to: –

select suitable accounting policies and then apply them consistently;

–

make judgements and estimates that are reasonable and prudent;

–

state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

–

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Independent Auditors’ Report to the Members of Aberdeen Asset Management PLC We have audited the financial statements on pages 32 to 58. We have examined the amounts disclosed relating to the Directors’ remuneration and share options, which form part of the Remuneration Report on pages 28 to 30. Respective responsibilities of Directors and Auditors The Directors are responsible for preparing the Annual Report. As described above, this includes responsibility for preparing the financial statements in accordance with applicable United Kingdom law and accounting standards. Our responsibilities, as independent auditors, are established in the United Kingdom by statute, the Auditing Practices Board, the Listing Rules of the Financial Services Authority, and by our profession’s ethical guidance. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding directors’ remuneration and transactions with the Group is not disclosed. We review whether the statement on pages 25 to 27 reflects the Company’s compliance with the seven provisions of the Combined Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read the other information contained in the Annual Report, including the corporate governance statement, and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Basis of audit opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group as at 30 September 2001 and of the profit of the Group for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

KPMG Audit Plc Chartered Accountants Registered Auditor, Aberdeen

18 December 2001 Aberdeen Asset Management 31

Accounting Policies Basis of preparation The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain investments, and in accordance with applicable Accounting Standards. The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements. Consolidation The consolidated financial statements incorporate the accounts of the Company and all its subsidiary undertakings. As permitted by Section 230 of the Companies Act 1985, a separate profit and loss account of the Company is not presented. The consolidated profit and loss account includes the results of subsidiary undertakings acquired during the year from their effective date of acquisition, the results of subsidiary undertakings disposed of during the year up to their effective date of disposal, and the Group’s share of the results of associated undertakings. In accordance with FRS 8, disclosure of transactions or balances between Group entities that have been eliminated on consolidation are not reported. Associated undertakings are included in the Consolidated Balance Sheet at cost plus attributable share of retained profits. Goodwill Purchased goodwill arising on consolidation in respect of acquisitions before 1 October 1998, when FRS 10 Goodwill and intangible assets was adopted, was written off to reserves in the year of acquisition. Purchased goodwill (representing the excess of the fair value of the consideration and associated costs given over the fair value of the separable net assets acquired) arising on consolidation in respect of acquisitions since 1 October 1998 is capitalised and amortised over its estimated useful life, normally 20 years. The estimated value of unit trust management contracts is included in the calculation of the fair value of the net assets acquired. Other management contracts are excluded from the calculation of the net assets acquired and are treated as purchased goodwill. Investments Investments held as fixed assets are stated at cost or valuation less provisions for any impairment in value. Investments held as current assets are stated at the lower of cost and net realisable value. Fixed intangible assets: unit trust management contracts Unit trust management contracts purchased by the Group are stated at cost and disclosed as intangible assets. These assets are not amortised, but are subject to an annual impairment review. Stocks Stocks of units in managed funds are stated at the lower of cost and market value, calculated at the bid price on the balance sheet date. Turnover Turnover represents the amount receivable in respect of the Group’s activities in providing asset management services. Taxation The charge for taxation is based on the results for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Provision is made for deferred taxation to the extent that it is probable that an actual liability will crystalise. Leases Where the Group enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. All other leases are operating leases and the rental charges are taken to the profit and loss account on a straight line basis over the life of the lease.

32 Aberdeen Asset Management

Depreciation Depreciation is provided by the Group to write off the cost, less any anticipated residual value, of fixed tangible assets by equal instalments over their estimated useful economic lives as follows: Heritable property Leasehold property Property improvements Computers, fixtures and fittings Motor vehicles

: 50 years : over the period of the lease : 5 years or the period of the lease : 3 - 10 years : 4 years

Foreign exchange Transactions of UK companies which are denominated in foreign currencies are converted at the rates of exchange ruling at the dates of the transactions. Assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Exchange differences are dealt with in the profit and loss account. The results of overseas subsidiary undertakings are translated at average exchange rates. Assets and liabilities of overseas subsidiary undertakings are translated at the year end rates and exchange differences are taken direct to reserves. Pension costs The principal pension scheme operated by the Group is a self-administered money purchase scheme. Benefits from the scheme are based on contributions made. Payments made to the scheme represent current service contributions and are charged to the profit and loss account. The Group also operates two defined benefit pension schemes which arose on acquisitions. Both of these schemes are closed to new membership and to future service accruals. Contributions to these schemes, which are paid according to the advice of an actuary, are charged to the profit and loss account so as to spread the cost over the expected working lives of active members. Employee Share Ownership Plan (“ESOP”) The Company’s shares held by the ESOP are included in the financial statements as a fixed asset investment until such time as the interest in the shares is transferred unconditionally to the employees. The cost of awards to employees that take the form of such shares is recognised in the period to which the employees performance relates.

Aberdeen Asset Management 33

Consolidated Profit and Loss Account for the year ended 30 September 2001

Notes

Continuing activities £’000

Acquisitions £’000

2001 £’000

2000 £’000

1

126,583

55,511

182,094

115,721

4

(87,960) (1,530) –

(35,232) (11,080) (10,963)

(123,192) (12,610) (10,963)

(80,245) (1,251) –

(89,490)

(57,275)

(146,765)

(81,496)

38,623 (1,530)

20,279 (22,043)

58,902 (23,573)

35,476 (1,251)

37,093

(1,764)

35,329

34,225

Turnover Operating expenses Amortisation of goodwill Exceptional costs Total administrative expenses Operating profit before goodwill amortisation & exceptional costs Amortisation of goodwill & exceptional costs Operating profit

2

Net interest payable

5

Profit on ordinary activities before taxation

(10,740) 24,589

Tax on profit on ordinary activities

6

Profit for the financial year

7

Minority interests - equity

(9,599) 14,990

(264) 33,961 (9,835) 24,126

(29)

Profit attributable to shareholders Dividends Equity dividends on ordinary shares Non-equity dividends on redeemable preference shares

8 8

Retained (loss) profit for the financial year

19

Earnings per share – basic Before goodwill amortisation & exceptional costs After goodwill amortisation & exceptional costs

9

Earnings per share – diluted Before goodwill amortisation & exceptional costs After goodwill amortisation & exceptional costs

9

–

14,961

24,126

(17,582) (1,265)

(14,679) –

(18,847)

(14,679)

(3,886)

9,447

21.12p 8.51p

16.48p 15.67p

19.49p 8.26p

15.44p 14.71p

Turnover and operating profit in the current and previous years arise wholly from continuing activities.

Statement of Total Recognised Gains and Losses for the year ended 30 September 2001

Notes Profit for the financial year Revaluation of fixed asset investments Translation of foreign currency net investments Total recognised gains and losses for the financial year

34 Aberdeen Asset Management

19 19

2001 £’000

2000 £’000

14,961 200 (498)

24,126 7,737 845

14,663

32,708

Balance Sheets as at 30 September 2001 Group

ASSETS Fixed assets Intangible assets Goodwill Tangible assets Investments

Current assets Stocks Debtors Investments Cash at bank and in hand

Notes

2001 £’000

2000 £’000

2001 £’000

2000 £’000

10 11 12 13

57,517 350,562 17,924 30,385

57,517 23,460 11,307 25,218

502 4,489 14,304 430,293

502 3,605 10,385 137,295

456,388

117,502

449,588

151,787

370 82,506 838 47,163

465 42,294 3,054 45,815

– 71,852 819 25,545

– 18,960 2,288 10,167

130,877

91,628

98,216

31,415

587,265

209,130

547,804

183,202

56,521

65,018

–

–

643,786

274,148

547,804

183,202

48,762 18,416 7,937 133,994 8,811

15,884 17,982 7,737 44,630 13,195

48,762 18,416 7,937 52,518 20,405

15,884 17,982 7,737 52,518 1,849

186,892 31,028

99,428 –

117,010 31,028

95,970 –

217,920

99,428

148,038

95,970

210

–

–

–

14 15 16 17

Assets attributable to equity shareholders Assets of long-term life assurance business

25

Total assets LIABILITIES Capital and reserves Called up share capital Share premium account Revaluation reserve Merger reserve Profit & loss account

Company

18 19 19 19 19

Shareholders’ funds Equity Non equity 20 Minority interest - equity Provisions for liabilities and charges

24

9,844

1,454

4,412

1,451

Creditors: due within one year

21

157,041

81,432

193,786

60,411

Creditors: due after more than one year, including convertible debt

22

202,250

26,816

201,568

25,370

176,750 25,500

1,446 25,370

176,068 25,500

– 25,370

587,265

209,130

547,804

183,202

56,521

65,018

–

–

643,786

274,148

547,804

183,202

Creditors Convertible debt

Liabilities of long-term life assurance business Total liabilities

The financial statements were approved by the Board of Directors on 18 December 2001, and signed on its behalf by:

C L A Irby, Chairman

W J Rattray, Finance Director Aberdeen Asset Management 35

Consolidated Cash Flow Statement for the year to 30 September 2001 2001 Notes

£’000

Net cash inflows from operating activities Core cashflow from operating activities Effects of short-term timing differences on unit trust settlements Dividends received from asssociated undertakings

2 13

Returns on investments and servicing of finance Net interest paid Non-equity dividends paid

2000 £’000

Capital expenditure and financial investment Purchases of tangible fixed assets Purchases of fixed asset investments Purchases of current asset investments Sales of tangible fixed assets Sales of fixed asset investments and loan repayments Sales of current asset investments

12 13

57,359

4,491

(10,131)

41,669 235

47,228 –

(148) – (8,809)

(148)

(8,625)

(4,735)

(9,133) (378) – 761 3,569 2,203

(5,308) (10,737) (45) 21 696 – (2,978)

Acquisitions and disposals Purchases of subsidiary undertakings Purchases of goodwill

(198,353) (1,169)

Equity dividends paid Cash (outflow) inflow before financing Financing Issue of share capital New long term loans Instalments repaid on long term loans

18

Increase in cash in year

£’000

37,178

(7,818) (991)

Taxation paid

£’000

(15,373) (7,215) (1,353)

(199,522)

(8,568)

(15,346)

(11,241)

(193,376)

7,163

496 202,600 (8,004)

503 – –

1,716

7,666

2001 £’000

2000 £’000

Reconciliation of net cash flow to movement in net (debt) funds Notes Increase in cash in year Cash inflow from increase in long term loans Instalments repaid on long term loans

1,716 (202,600) 8,004

7,666 – –

Change in net (debt) funds resulting from cash flows Loan stock issued in consideration for acquisition Translation difference

(192,880) (10,000) (498)

7,666 – 845

Movement in net (debt) funds in the year Net funds at 1 October

22

(203,378) 20,445

8,511 11,934

Net (debt) funds at 30 September

22

(182,933)

20,445

36 Aberdeen Asset Management

Notes to the Accounts 1.

Segmental information The Group is involved in a single business activity of providing asset management services. These services are provided to clients in the following geographic areas: United Rest of Rest of Kingdom Europe World Total £’000 £’000 £’000 £’000 Year to September 2001 Turnover 145,880 18,252 17,962 182,094 Profit on ordinary activities before interest

24,921

Net assets outwith the UK

4,515

5,893

35,329

6,989

6,442

13,431

Year to September 2000 Turnover

99,295

10,433

5,993

115,721

Profit on ordinary activities before interest

26,788

5,395

2,042

34,225

6,121

2,238

8,359

Net assets outwith the UK

Turnover and profit on ordinary activities before interest by origin are not materially different to the information given above.

2.

Operating profit Operating profit is stated after charging (crediting): Auditors’ remuneration – for audit services* – for other regulatory reporting requiring certificate Operating lease payments Share of results of associated undertakings Depreciation – owned assets – leased assets Amortisation of goodwill Directors’ emoluments Profit on disposal of tangible fixed assets

2001 £’000

2000 £’000

284 58 2,904 (119) 3,981 467 12,610 5,673 (385)

191 16 2,517 – 1,973 217 1,251 4,900 –

*£22,500 (2000 – £21,600) of this total relates to the audit of the Company. The Company’s auditors received fees of £175,000 (2000 – nil) for advisory and reporting services provided in relation to certain acquisitions. These costs are included within the acquisition costs to which they relate (note 13). Details of Directors’ remuneration are given in the Remuneration Report on pages 28 to 30.

Reconciliation of operating profit to operating cash flow Operating profit Depreciation charges Amortisation of goodwill Provision for diminution in value of fixed asset investments Profit on disposal of tangible fixed assets Loss on disposal of fixed asset investments Loss on disposal of current asset investments Accelerated depreciation and write off of tangible fixed assets Share of results of associated undertakings (Decrease) increase in provisons for liabilities and charges Decrease in stock (Increase) decrease in debtors Increase in creditors

2001 £’000 35,329 4,448 12,610 – (385) 22 32 1,662 (119) (292) 122 (22,482) 10,722

2000 £’000 34,225 2,190 1,251 481 – – – – – 151 149 753 8,028

Net cash inflow from operating activities

41,669

47,228

Aberdeen Asset Management 37

Notes to the Accounts 3.

Average number of employees during the year

4.

5.

2001 £’000

2000 £’000

36,116 15,018 865 3,670 4,739

18,360 12,569 409 1,724 1,764

60,408

34,826

Number 799

Number 465

2001 £’000

2000 £’000

4,439 4,214 1,662 519 129

– – – – –

10,963

–

Employees Aggregate employee costs, including Directors: Salaries and bonuses Contributions to discretionary employee benefits trust Other benefits Social security costs Other pension costs

Exceptional costs Recognised within operating profit Arising from acquisitions: Redundancy, relocation and duplicate staff costs Costs of integration of investment administration and fund mergers Accelerated depreciation and write off of tangible fixed assets Costs of termination of surplus property Other costs

2001 £’000 1,817 10,449 217 (1,743)

Net interest payable Paid on 7% Convertible Subordinated Loan Notes Paid on term loans Paid on floating rate guaranteed unsecured loan stock Received on deposits and other interest bearing accounts

2000 £’000 1,724 – – (1,460)

10,740

264

2001

6.

Taxation UK Corporation tax at 30% (2000 – 30%) Less: double taxation relief

Deferred taxation Overseas taxation

Underprovision in respect of prior years

7.

Continuing activities £’000 8,317 (1,450)

Exceptional costs £’000 (2,319) –

Total £’000 5,998 (1,450)

£’000 5,868 (71)

6,867 1,852 4,131

(2,319) (499) (447)

4,548 1,353 3,684

5,797 1,024 2,992

12,850 14

(3,265) –

9,585 14

9,813 22

12,864

(3,265)

9,599

9,835

Profit for the financial year The profit dealt with in the accounts of the Company was £37,403,000 (2000 – £15,891,000).

38 Aberdeen Asset Management

2000

8.

Dividends Equity dividends on ordinary shares: Interim paid – 3.85p (2000 – 3.5p) Final proposed – 6.65p (2000 – 6.0p)

Non equity dividends on redeemable preference shares: 31 January paid 30 April paid 31 July paid Accrued to 30 September

9

2001 £’000

2000 £’000

6,062 11,520

5,395 9,284

17,582

14,679

183 394 414 274

– – – –

1,265

–

Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares. Basic

Profit for the financial year Non equity dividends Interest saving, net of attributable taxation, on notional conversion of loan notes Profit for the financial year - FRS 14 basis Amortisation of goodwill Exceptional costs, net of attributable taxation Profit for the financial year before goodwill amortisation & exceptional costs

2001 £’000 14,961 (1,265)

Diluted

2000 £’000 24,126 –

2001 £’000 14,961 (1,265)

2000 £’000 24,126 –

–

–

1,249

1,243

13,696 12,610 7,698

24,126 1,251 –

14,945 12,610 7,698

25,369 1,251 –

34,004

25,377

35,253

26,620

2001 Number of shares 000’s

2000 Number of shares 000’s

160,980 17,442 2,494

153,981 17,442 1,012

180,916

172,435

Weighted average number of shares For basic earnings per share Dilutive effect of convertible loan notes Dilutive effect of exercisable share options and performance shares For diluted earnings per share

The earnings per share calculations required by FRS 14 may be affected by items of a non-recurring nature. The Directors believe that the Group’s results are more fairly represented by a measure of earnings per share which excludes such items and therefore also present earnings per share figures stated before the effects of exceptional costs and goodwill amortisation charged to the profit and loss account. The two measures of earnings per share can be reconciled as follows: Basic Diluted After goodwill amortisation & exceptional costs - FRS 14 basis Add: amortisation of goodwill Add: exceptional costs, net of attributable taxation Before goodwill amortisation & exceptional costs

2001 8.51p 7.83p 4.78p

2000 15.67p 0.81p –

2001 8.26p 6.97p 4.26p

2000 14.71p 0.73p –

21.12p

16.48p

19.49p

15.44p

Aberdeen Asset Management 39

Notes to the Accounts 10

Fixed intangible assets The cost of unit trust management contracts purchased by the Group is as follows: Group £’000 57,517

At 1 October 2000 and 30 September 2001

11

Company £’000 502

Group

Company

Consolidation goodwill £’000

Purchased goodwill £’000

Total £’000

Purchased goodwill £’000

23,129 337,697

4,282 2,015

27,411 339,712

4,282 1,169

360,826

6,297

367,123

5,451

3,274 12,283

677 327

3,951 12,610

677 285

15,557

1,004

16,561

962

At 30 September 2001

345,269

5,293

350,562

4,489

At 30 September 2000

19,855

3,605

23,460

3,605

Goodwill Cost At 1 October 2000 Additions At 30 September 2001 Amortisation At 1 October 2000 Charge for year At 30 September 2001 Net book value

40 Aberdeen Asset Management

12

Fixed tangible assets Group Cost At 1 October 2000 Additions Arising on acquisitions Surplus assets written off on acquisition Disposals At 30 September 2001 Depreciation At 1 October 2000 Charge for year: Owned assets Hire purchase and leased Arising on acquisitions Surplus assets written off on acquisition On disposals At 30 September 2001

Heritable property £’000

Short leasehold property £’000

Computers fixtures and fittings £’000 13,477 7,492 6,564 (4,322) (43)

Motor vehicles £’000 240 49 720 – (186)

Total £’000

2,446 – – – –

4,019 1,592 2,351 (2,100) (251)

20,182 9,133 9,635 (6,422) (480)

2,446

5,611

23,168

823

32,048

98

1,034

7,666

77

8,875

49 – – – –

– 467 1,178 (1,129) (49)

3,757 – 4,233 (3,631) (10)

175 – 254 – (45)

3,981 467 5,665 (4,760) (104)

147

1,501

12,015

461

14,124

2,299 –

– 4,110

11,153 –

362 –

13,814 4,110

2,299

4,110

11,153

362

17,924

2,348 –

– 2,985

5,811 –

163 –

8,322 2,985

2,348

2,985

5,811

163

11,307

Company Cost At 1 October 2000 Additions Inter group transfers Disposals

2,446 – – –

3,517 978 – –

12,216 4,818 1,674 –

64 24 270 (87)

At 30 September 2001

2,446

4,495

18,708

271

25,920

98

886

6,867

7

7,858

49 – – –

– 324 – –

2,758 – 502 –

147

1,210

10,127

132

11,616

2,299 –

– 3,285

8,581 –

139 –

11,019 3,285

2,299

3,285

8,581

139

14,304

2,348 –

– 2,631

5,349 –

57 –

7,754 2,631

2,348

2,631

5,349

57

10,385

Net book value At 30 September 2001 Owned assets Hire purchase and leased

At 30 September 2000 Owned assets Hire purchase and leased

Depreciation At 1 October 2000 Charge for year: Owned assets Hire purchase and leased Inter group transfers On disposals At 30 September 2001 Net book value At 30 September 2001 Owned assets Hire purchase and leased

At 30 September 2000 Owned assets Hire purchase and leased

51 – 108 (34)

18,243 5,820 1,944 (87)

2,858 324 610 (34)

Aberdeen Asset Management 41

Notes to the Accounts 13

Fixed asset investments Group Shares At 1 October 2000 Additions Revaluation Arising on acquisitions Reclassified Dividend received Disposals

Own shares (listed) £’000

Associated companies (unlisted) £’000

Other investments (listed) £’000

Other investments (unlisted) £’000

609 – – – – – (110)

– – – 613 40 (235) –

– 10 – 1,270 – – (911)

499

418

369

17,419

18,705

Share of results At 1 October 2000 Share of results of associates

– –

– 119

– –

– –

– 119

At 30 September 2001

–

119

–

–

119

Loans At 1 October 2000 Repaid

– –

– –

– –

At 30 September 2001

–

–

–

11,561

11,561

499 –

537 –

369 –

17,980 11,000

19,385 11,000

499

537

369

28,980

30,385

609 –

– –

– –

15,709 8,900

16,318 8,900

609

–

–

24,609

25,218

At 30 September 2001

Net book value At 30 September 2001 At cost At valuation

At 30 September 2000 At cost At valuation

42 Aberdeen Asset Management

11,303 368 2,100 4,623 (40) – (935)

Total £’000

13,306 (1,745)

11,912 378 2,100 6,506 – (235) (1,956)

13,306 (1,745)

Company Shares At 1 October 2000 Additions : increase in existing subsidiary undertakings other Revaluation Disposals At 30 September 2001 Loans At 1 October 2000 Additions Repaid At 30 September 2001 Net book value At 30 September 2001 At cost At valuation

At 30 September 2000 At cost At valuation

Subsidiary undertakings (unlisted) £’000

Own shares (listed) £’000

Other investments (unlisted) £’000

Total £’000

112,410 20,376 113,215 – –

609 – – – (110)

10,970 – – 2,100 –

246,001

499

13,070

– 159,162 –

– – –

159,162

–

11,561

170,723

405,163 –

499 –

13,631 11,000

419,293 11,000

405,163

499

24,631

430,293

112,410 –

609 –

15,376 8,900

128,395 8,900

112,410

609

24,276

137,295

13,306 – (1,745)

123,989 20,376 113,215 2,100 (110) 259,570

13,306 159,162 (1,745)

Of the other investments loan balance at 30 September 2001, £1,799,000 is due for repayment within one year. The Company’s investment in the convertible ordinary shares of Lombard International Assurance SA (“Lombard”), a Luxembourg registered life company, converted to ordinary shares during the year. This investment represents approximately 15% of the equity of Lombard. The investment has been valued on the basis of the relevant share of Lombard’s most recently published embedded value. On 30 November 2000, the Company subscribed for Discounted Convertible Unsecured Loan Stock 2030 issued by Aberdeen Murray Johnstone Limited. The principal amount of the loan stock is £172,950,000 and the cost to the Company was £150,000,000. During the year discount of £9,162,000 was added to the cost of the investment. At 30 September 2001, 253,000 own shares of 10p, which were not conditionally gifted, under option or held for the beneficial ownership of employees, were held by the company’s Employee Share Ownership Trust (market value £810,000). The rights to dividends on these shares have been waived until such time that they are held beneficially by the employees.

Aberdeen Asset Management 43

Notes to the Accounts Acquisitions i) On 30 November 2000 the acquisition of the entire issued share capital of Murray Johnstone Holdings Limited was completed for a cash consideration of £155 million. The assets and liabilities at the date of acquisition were as follows: Book value Fair value Fair value on acquisition adjustments to group £’000 £’000 £’000 Investments 6,065 – 6,065 Tangible fixed assets 2,584 (600) 1,984 Cash at bank and in hand 17,930 – 17,930 Stock 27 – 27 Debtors 7,845 421 8,266 Creditors due within one year (16,549) (431) (16,980) Provisions for liabilities and charges (821) (4,214) (5,035) Minority interests (158) – (158) Net assets of acquired business

16,923

Goodwill

(4,824)

12,099 142,534 154,633

Discharged by: Expenses of acquisition Cash payment

4,210 150,423 154,633

Fair value adjustments The fair value adjustments, which are stated net of tax, are summarised as follows: Recognition of actuarial deficit in funding of the Murray Johnstone Retirement Benefits Plan Recognition of commitment to make payments to the Murray Johnstone Retirement Benefits Plan Alignment of depreciation policies with those of the Group Contingent consideration received on the sale of a business completed before the acquisition date Other adjustments

£’000 4,214 500 420 (350) 40 4,824

The summarised profit and loss account of Murray Johnstone Holdings Limited for the period 1 December 2000 to 30 September 2001 was as follows: £’000 Turnover 19,550 Administrative expenses (16,086) Operating profit Net interest receivable Profit on ordinary activities before taxation Taxation

3,464 983 4,447 (1,371)

Profit on ordinary activities after taxation Minority interests

3,076 (17)

Profit on ordinary activities after taxation and minority interests

3,059

There were no recognised gains or losses other than those dealt with in the summarised profit and loss account shown above. Amortisation of goodwill during the period attributable to the acquisition noted above amounted to £5,939,000. The Murray Johnstone Group made a profit after tax and minority interests of £4,849,000 in the eleven month statutory accounting period to 30 November 2000.

44 Aberdeen Asset Management

ii) The following asset management companies were purchased during the year: On 22 December 2000 the entire issued share capital of the EquitiLink Group was purchased for a consideration of £52.4 million. On 29 December 2000 the acquisition of the entire issued share capital of Themis Investment Management Limited was completed for a cash consideration of £3.8 million. On 29 August 2001 the acquisition of the entire issued share capital of Ivory & Sime Asset Management Limited was completed for a cash consideration of £9.9 million. Contingent deferred consideration of £1 million is payable on 29 August 2003 provided that the assets under management of key management contracts at that date are not less than the aggregate values at the acquisition date. The assets and liabilities at the respective dates of acquisition were as follows:

Intangible assets Investments Tangible fixed assets Cash at bank and in hand Debtors Creditors due within one year Creditors after more than one year Net assets of acquired businesses

Book value Fair value on acquisition adjustments £’000 £’000 2,491 (2,491) – 114 126 – 4,017 – 4,286 (1,036) (4,017) 191 (1,006) – 5,897

(3,222)

Goodwill

Fair value to group £’000 – 114 126 4,017 3,250 (3,826) (1,006) 2,675 63,479 66,154

Discharged by: Issue of redeemable preference shares Expenses of acquisition Cash payment Deferred consideration

31,028 2,048 32,639 439 66,154

Fair value adjustments The fair value adjustments, which are stated net of tax, relate to the acquistion of the EquitiLink Group and are summarised as follows: £’000 Alignment of accounting policies in relation to management rights and loans to joint venture 2,467 Alignment of accounting policies in respect of deferred staff incentives in existence prior to acquisition 833 Revaluation of investment (101) Other adjustments 23 3,222 The summarised profit and loss accounts for the above noted acquisitions for the financial periods from the dates of acquisition to 30 September 2001 were as follows: Themis Ivory & Sime Investment Investment EquitiLink Group Management Management (23 Dec 2000) (30 Dec 2000) (30 Aug 2001) £’000 £’000 £’000 Turnover 8,937 544 273 Administrative expenses (5,025) (103) (83) Operating profit Net interest receivable

3,912 123

441 79

190 6

Profit on ordinary activities before taxation Taxation

4,035 (1,713)

520 (156)

196 (59)

Profit on ordinary activities after taxation

2,322

364

137

Aberdeen Asset Management 45

Notes to the Accounts The summarised profit and loss accounts for the above noted acquisitions from the start of their statutory financial periods to the respective dates of acquisition were are follows: Ivory & Sime Investment EquitiLink Group Management 1 July 2000 1 Jan 2001 to 22 Dec 2000 to 29 Aug 2001 £’000 £’000 Turnover 17,998 3,845 Administrative expenses (30,506) (1,520) Operating profit (loss) Net interest receivable

(12,508) (282)

2,325 190

Profit (loss) on ordinary activities before taxation Taxation

(12,790) 2,365

2,515 (755)

Profit (loss) on ordinary activities after taxation

(10,425)

1,760

There were no recognised gains or losses other than those dealt with in the summarised profit and loss accounts shown above. The profit (loss) on ordinary activities after taxation for the above noted acquisitions for their statutory financial periods ended prior to the financial period in which the acquisition took place were as follows: Themis Ivory & Sime Investment Investment EquitiLink Group Management Management Year to Year to Year to 30 Jun 2000 31 Dec 2000 30 Dec 2000 £’000 £’000 £’000 Profit (loss) on ordinary activities after taxation 4,370 (327) 1,438 There were no recognised gains or losses other than the profits (losses) shown above, except in the EquitiLink Group which had translation losses of £2,818,000. The total amount of amortisation of goodwill during the period attributable to the acquisitions noted above was as follows: EquitiLink Group Themis Investment Management Limited Ivory & Sime Asset Management Limited

£’000 2,030 64 32 2,126

46 Aberdeen Asset Management

iii) The following property asset management companies were purchased during the year: On 1 October 2000 the acquisition of the entire issued share capital of Barclays Property Investment Limited was completed for a cash consideration of £23.3 million. On 27 April 2001 the entire issued share capital of RREEF (UK) Limited was purchased for a cash consideration of £7.8 million. On 3 May 2001 the entire issued share capital of Celexa Fastighetskapital AB, Celexa Real Estate Investment Management BV and Celexa Real Estate Investment Management Limited, (Celexa Group) was purchased for a consideration of £18.1 million. The assets and liabilities at the dates of acquisition were as follows:

Investments Goodwill Tangible fixed assets Cash at bank and in hand Debtors Current asset investments Creditors due within one year Provisions for liabilities and charges Minority interests

Book value Fair value on acquisition adjustments £’000 £’000 327 – 846 – 1,860 – 5,562 – 6,142 3,071 19 – (9,201) (3,071) (394) – (23) –

Net assets of acquired businesses

5,138

–

Goodwill

Fair value to group £’000 327 846 1,860 5,562 9,213 19 (12,272) (394) (23) 5,138 44,061 49,199

Discharged by: Issue of ordinary shares Expenses of acquisition Cash payment Deferred consideration

15,027 3,710 29,781 681 49,199

Fair value adjustments On completion of the acquisition of RREEF (UK) Limited an additional element of consideration was unquantified and dependent on the finalisation of a development profit arising from the ongoing business. Subsequent to the acquisition this development profit was determined at £3,071,000 and, on receipt, additional consideration of £2,150,000, representing the development profit after tax, was paid. The summarised profit and loss accounts for the above noted acquisitions for the financial periods from the effective dates of acquisition were as follows: Barclays Property Investment RREEF (UK) Celexa Group (1 Oct 2000) (28 April 2001) (4 May 2001) £’000 £’000 £’000 Turnover 7,184 1,930 9,925 Administrative expenses (7,286) (1,796) (7,879) Operating profit (loss) Net interest receivable

(102) 67

134 20

2,046 14

Profit (loss) on ordinary activities before taxation Taxation

(35) –

154 (152)

2,060 (531)

Profit (loss) on ordinary activities after taxation Minority interests

(35) –

2 –

Profit (loss) on ordinary activities after taxation and minority interests

(35)

2

1,529 (12) 1,517

Aberdeen Asset Management 47

Notes to the Accounts The summarised profit and loss accounts for the above noted acquisitions for their statutory financial periods to the effective dates of acquisition were as follows: RREEF (UK) Celexa Group 1 Jan 2001 1 Jan 2001 to 27 April 2001 3 May 2001 £’000 £’000 Turnover 1,586 7,048 Administrative expenses (1,722) (5,618) Operating profit (loss) Net interest receivable

(136) 61

1,430 43

Profit (loss) on ordinary activities before taxation Taxation

(75) –

1,473 (548)

Profit (loss) on ordinary activities after taxation Minority interests

(75) –

925 12

Profit (loss) on ordinary activities after taxation and minority interests

(75)

937

There were no recognised gains or losses other than those dealt with in the summarised profit and loss accounts shown above. The profit on ordinary activities after taxation for the above noted acquisitions for their statutory financial periods ended prior to the financial period in which the acquisition took place were as follows: Barclays Property Investment RREEF (UK) Celexa Group 1 Jan 2000 Year to Year to to 30 Sep 2000 31 Dec 2000 31 Dec 2000 £’000 £’000 £’000 Profit on ordinary activities after taxation and minority interests

1,456

3,036

6,203

There were no recognised gains or losses other than the profits shown above. The total amount of amortisation of goodwill during the period attributable to the acquisitions noted above was as follows: Barclays Property Investment Limited RREEF UK Limited Celexa Group

£’000 1,091 127 336 1,554

Subsequent to the relevant dates of acquisition the names of the principal operating companies detailed above were changed as follows: Name at date of acquisition New name Barclays Property Investment Limited Aberdeen Celexa Property Investors UK & Ireland Limited RREEF (UK) Limited Aberdeen Property Asset Managers Limited Celexa Real Estate Investment Management Limited Aberdeen Property Investors International Limited Celexa Fastighetskapital AB Aberdeen Celexa Property Investors Nordic Region AB Celexa Real Estate Investment Management BV Aberdeen Celexa Property Investors Continental Europe BV iv) On 3 June 2001, the entire issued share capital of G Developments Limited and Gresham Unit Trust Managers Limited was purchased for a consideration of £87.6 million. The assets and liabilities at the date of acquisition were as follows: Book value on acquisition & fair value to group £’000 Cash at bank and in hand 17 Debtors 10 Creditors due within one year (16) Net assets of acquired business Goodwill

11 87,623 87,634

48 Aberdeen Asset Management

Discharged by: Issue of ordinary shares Issue of floating rate guaranteed unsecured loan stock Expenses of acquisition

76,125 10,000 1,509 87,634

The summarised profit and loss account of Gresham Unit Trust Managers Limited for the financial periods to and from date of acquisition were as follows: 1 Jan 2001 4 June 2001 to 3 June 2001 to 30 Sep 2001 £’000 £’000 Turnover 37 16 Administrative expenses (12) (2) Operating profit Net interest receivable

25 7

14 1

Profit on ordinary activities before taxation Taxation

32 (10)

15 (4)

Profit on ordinary activities after taxation

22

11

There were no recognised gains or losses other than those dealt with in the summarised profit and loss accounts shown above. Gresham Unit Trust Managers Limited made a profit after tax and minority interests of £69,000 in the year ended 31 December 2000. The business of the company was subsequently merged with a fellow subsidiary undertaking, Aberdeen Unit Trust Managers Limited, and the company ceased to trade. G Developments Limited was dormant in the financial period prior to acquisition, and has remained dormant since the date of acquisition. At the date of acquisition G Developments Limited held the contract to manage the assets of Life Assurance Holding Corporation on behalf of Windsor Life Assurance Company. The assets under management at the date of acquisition amounted to approximately £5.5 billion, and the contract was subsequently transferred to a fellow subsidiary undertaking, Aberdeen Asset Managers Limited. Amortisation of goodwill during the period attributable to the acquisition noted above amounted to £1,460,000. The effects of the acquisitions on the Group’s cashflows were as follows: Murray Other Property G Developments Johnstone Asset Asset & Gresham Unit Group Management Management Trust Managers £’000 £’000 £’000 £’000 Contribution to Group’s net operating cashflows 661 1 802 47 Returns on investments and servicing of finance 1,217 221 100 3 Realised from (utilised for) capital expenditure 1,908 (468) (1,459) – Taxation paid (296) (39) (635) –

Total £’000 1,511 1,541 (19) (970)

Fair value adjustments in respect of these acquired companies have been determined on a provisional basis using the information available subsequent to the date of acquisition, and may be subject to adjustment following the outcome of future events. Following the various acquisitions, certain business activities were integrated with those of existing Group companies. The results of these activities after the dates of integration into other Group companies are excluded from the results of the acquired entities detailed above.

Aberdeen Asset Management 49

Notes to the Accounts The principal companies in which the Group interest was more than 10% at 30 September 2001 were as follows: Subsidiary undertakings Aberdeen Asset Managers Limited Aberdeen Asset Managers (C.I.) Limited Aberdeen Asset Management Asia Limited Aberdeen Asset Management Ireland Limited Aberdeen Asset Management Limited Aberdeen Celexa Property Investors UK & Ireland Limited Aberdeen Fund Managers, Inc Aberdeen Fund Managers Ireland Limited Aberdeen Murray Johnstone Limited+ Aberdeen Property Investors International Limited Aberdeen Unit Trust Managers Limited Aberdeen International Limited Aberdeen International (C.I.) Limited Aberdeen International Management Ireland Limited Aberdeen Investment Services SA* Aberdeen International Fund Managers Limited Aberdeen Graham Asset Management Limited Aberdeen Asset Managers Guernsey Limited Aberdeen Asset Managers Jersey Limited** Aberdeen Property Asset Managers Limited++ Aberdeen Celexa Property Investors Nordic Region AB++ Aberdeen Celexa Property Investors Continental Europe BV++ EquitiLink USA, Inc

Principal activity Fund management Fund management Fund management Fund management Fund management Property asset management Fund management Fund management Fund management Property asset management Unit trust management Long term assurance Fund management Fund management Fund management Fund distribution Fund management Fund management Fund management Property asset management Property asset management Property asset management Fund management

% owned 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Country of registration Scotland Jersey Singapore Ireland Australia England USA Ireland Scotland England England Guernsey Jersey Ireland Luxembourg Hong Kong Jersey Guernsey Jersey Scotland Sweden Netherlands USA

Country of operation UK Jersey Singapore Ireland Australia UK USA Ireland UK UK UK Guernsey Jersey Ireland Luxembourg Hong Kong Jersey Guernsey Jersey UK Sweden Netherlands USA

* Held by Aberdeen Asset Managers Limited. ** Held by Aberdeen Graham Asset Management Limited. + Includes the Murray Johnstone Group of companies ++Held by Aberdeen Property Investors International Limited All of the above investments consist of holdings of ordinary share capital. The Company also owns 100% of the deferred shares issued by Aberdeen Unit Trust Managers Limited, and holds investments in other subsidiary undertakings, the results of which are not significant in a Group context. % Country of Country of Associated undertakings Principal activity owned registration operation Murray Avenir Finance Fund management 50 France France Euractions Management Limited Fund management 50 Scotland UK Apollo Investment Management Limited Fund management 33 Singapore Singapore

14

2001 £’000 370

Stocks Units in managed funds

Group 15

2000 £’000 465

Company

Debtors Amounts due within one year Unit trust trustees for units liquidated Debtors for unit sales

2001 £’000

2000 £’000

2001 £’000

2000 £’000

4,372 32,289

2,074 19,061

– –

– –

Other trade debtors Amounts due by subsidiary undertakings Prepayments and accrued income Other debtors

36,661 28,796 – 15,696 1,353

21,135 8,926 – 8,670 3,563

– 380 68,918 1,336 1,218

– 78 17,121 435 1,326

82,506

42,294

71,852

18,960

50 Aberdeen Asset Management

Group 16

Current asset investments Listed on London Stock Exchange Unlisted

Company

2001 £’000 805 33

2000 £’000 805 2,249

2001 £’000 805 14

2000 £’000 805 1,483

838

3,054

819

2,288

The market value of listed investments held at the balance sheet date was £1,144,000 (2000 – £1,674,000).

17

Analysis of the balances of cash as shown in the balance sheet Cash at bank and in hand

2001 £’000

Change in year £’000

2000 £’000

Change in year £’000

1999 £’000

47,163

1,348

45,815

11,105

34,710

Analysis of the changes in cash Net cash inflow before adjustment for the effects of foreign exchange rates Effects of foreign exchange rate changes

18

Share capital Authorised: Ordinary shares of 10p 5.25% Redeemable preference shares of £1 Deferred shares of 10p Performance shares of 50p

Allotted, called up and fully paid: Ordinary shares of 10p 5.25% Redeemable preference shares of £1 Performance shares of 50p

2001 £’000 1,716 (368)

2000 £’000 7,666 3,439

1,348

11,105

2001 £’000

2000 £’000

22,500 39,000 1,250 1,250

22,500 – 1,250 1,250

64,000

25,000

17,323 31,028 411

15,473 – 411

48,762

15,884

A total of 617,500 ordinary shares of 10p were issued at an average price of 80.28p pursuant to the exercise of options granted to employees under the Executive share option scheme. 2,876,000 ordinary shares of 10p were issued at a price of 522.5p as part of the consideration for the purchase of the Celexa group of companies and 15,000,000 ordinary shares of 10p were issued at a price of 507.5p as part of the consideration for the purchase of G Developments Limited and Gresham Unit Trust Managers Limited (note 13). In accordance with s131 of the Companies Act 1985 the premium arising on the issue of these shares has been credited to Merger Reserve. 31,028,240 5.25% redeemable preference shares of £1 were issued at par as part of the consideration for the purchase of the EquitiLink group of companies (note 13). The redeemable preference shares have no votes and are entitled to a fixed dividend of 5.25% per annum, payable quarterly in arrears on 31 January, 30 April, 31 July and 31 October. They are redeemable, at par, in equal amounts on 31 October 2001, 2002 and 2003. The Company has the option to make early redemption at any time, in tranches of not less than 500,000 shares, subject to payment of dividend up to the date of redemption. On a winding up of the Company the preference shareholders have a right to receive, in priority to payments to ordinary shareholders, the total amount paid up on the preference shares, plus any accrued dividends. The performance shares are not entitled to receive any dividend or distribution, and shall rank after the nominal value of the ordinary shares on a winding up, to a maximum of the nominal value of the performance shares. Aberdeen Asset Management 51

Notes to the Accounts The following share options were in place at 30 September 2001: Option price Date option granted per share Period of exercise Executive share option scheme 2 March 1992 33p 2 March 1995 - 1 March 2002 23 July 1993 40p 23 July 1996 - 22 July 2003 1994 Executive share option scheme 30 March 1994 91p 30 March 1999 - 29 March 2004 9 July 1998 121p 9 July 2003 - 9 July 2008 20 January 1999 101p 20 January 2004 - 20 January 2009 8 December 1999 235p 8 December 2004 - 8 December 2009 8 December 1999 261p 8 December 2004 - 8 December 2009 26 June 2000 531p 26 June 2003 - 26 June 2010 6 December 2000 545p 6 December 2003 - 6 December 2010 6 December 2000 556p 6 December 2003 - 6 December 2010 5 June 2001 584p 5 June 2004 - 5 June 2011 5 June 2001 585p 5 June 2004 - 5 June 2011

Number of shares Total Directors 12,500 15,000

– –

627,500 525,500 2,062,500 299,500 2,235,500 3,152,500 502,500 52,500 201,750 2,513,250

485,000 252,500 1,050,000 – 1,295,000 1,350,000 5,500 169,500 – 950,000

Options granted under the 1994 Executive share option scheme may only be exercised if the Remuneration Committee is satisfied that earnings per share have increased over a period of three years or longer by 5% per annum in excess of the average growth in the stock markets in which the Group’s assets under management are invested. Full details of options held by Directors are given in the Remuneration Report on pages 28 to 30.

19

Reserves Group At 1 October 2000 Arising on the issue of shares Revaluation of fixed asset investments (note 13) Deferred tax provided on revaluation (note 24) Retained loss for year Exchange losses At 30 September 2001 Company At 1 October 2000 Arising on the issue of shares Revaluation of fixed asset investments (note 13) Deferred tax provided on revaluation (note 24) Retained profit for year At 30 September 2001

Share premium account £’000

Revaluation reserve £’000

17,982 434 – – – –

7,737 – 2,100 (1,900) – –

18,416

7,937

17,982 434 – – – 18,416

Merger reserve £’000 44,630 89,364 – – – –

Profit & loss account £’000 13,195 – – – (3,886) (498)

133,994

8,811

7,737 – 2,100 (1,900) –

52,518 – – – –

1,849 – – – 18,556

7,937

52,518

20,405

The cumulative amount of goodwill written off against reserves in respect of acquisitions prior to 1 October 1998 when FRS 10: Goodwill and intangible assets was adopted, amounts to £13,818,000 (2000 – £13,818,000).

52 Aberdeen Asset Management

Group 20

Company

Reconciliation of movements in shareholders’ funds Profit for the financial year Dividends Translation of foreign currency net investments Issue of share capital Revaluation of fixed asset investments

2001 £’000 14,961 (18,847) (498) 122,676 200

2000 £’000 24,126 (14,679) 845 503 7,737

2001 £’000 37,403 (18,847) – 33,312 200

2000 £’000 15,891 (14,679) 356 503 7,737

Net increase in shareholders’ funds

118,492

18,532

52,068

9,808

99,428

80,896

95,970

86,162

217,920

99,428

148,038

95,970

Opening shareholders’ funds Closing shareholders’ funds

Group 21

Company

Creditors: due within one year Unit trust trustees for units created Creditors for unit repurchases

2001 £’000 27,148 22,901

2000 £’000 16,707 13,420

2001 £’000 – –

2000 £’000 – –

Bank overdraft Bank term loans Other trade creditors Accruals UK Corporation tax Non UK taxation Tax and social security Dividends payable Deferred consideration due on acquisition Other creditors

50,049 – 28,861 6,138 43,952 3,228 3,407 2,566 11,793 1,120 5,927

30,127 – – 1,391 31,121 3,356 2,229 686 9,284 1,300 1,938

– 134,471 28,861 3,601 10,004 2,509 – 161 11,793 520 1,866

– 38,573 – 813 5,156 3,490 – 377 9,284 1,300 1,418

157,041

81,432

193,786

60,411

Group 22

Creditors: due after more than one year Bank term loans 7% Convertible Subordinated Loan Notes Floating rate guaranteed unsecured loan stock Non UK taxation Other creditors

Company

2001 £’000 165,735 25,500 10,000 9 1,006

2000 £’000 – 25,370 – 1,446 –

2001 £’000 165,735 25,500 10,000 – 333

2000 £’000 – 25,370 – – –

202,250

26,816

201,568

25,370

Bank term loans are unsecured and are repayable by six-monthly instalments over the period to 30 September 2007. US$37.5 million 7% Convertible Subordinated Loan Notes were issued to The Phoenix Companies Inc on 15 April 1996. The Notes are convertible at any time, at the option of the holder, into a maximum of 17,441,860 ordinary shares at a price of US$2.15. If not converted the loan notes are repayable on 29 March 2003, except that the Company has the option to extend the term of all or part of the Loan Notes for a maximum of two years thereafter. The Company has entered into currency swap arrangements to hedge the exchange risk related to this loan note liability. £10 million floating rate guaranteed unsecured loan stock was issued to Life Assurance Holding Corporation in part consideration of the Company’s acquisition of G Developments Limited on 3 June 2001 (note 13). The loan stock is repayable on 30 June 2006 and bears interest at the rate of 1% above six month LIBOR. Aberdeen Asset Management 53

Notes to the Accounts Group Loans Payable outwith five years Payable within 2 – 5 years Payable within 1 – 2 years Payable within one year (note 21)

Analysis of changes in loans during the year: At 1 October 2000 New loans drawn Instalments repaid

Analysis of changes in net (debt) funds

Group Cash at bank and in hand Debt due within one year Debt due after more than one year

Total

23

2000 £’000 – – –

2001 £’000 43,024 96,048 26,663

2000 £’000 – – –

165,735 28,861

– –

165,735 28,861

– –

194,596

–

194,596

–

– 202,600 (8,004)

At 30 September 2001 At 1 October 2000 £’000 45,815

Company

2001 £’000 43,024 96,048 26,663

– – –

194,596

–

Cash flow £’000 1,716

Issued on acquisitions £’000 –

– 202,600 (8,004) 194,596

Exchange movement £’000 (368)

– – – – At 30 September 2001 £’000 47,163

– (25,370)

(28,861) (165,735)

– (10,000)

– (130)

(28,861) (201,235)

(25,370)

(194,596)

(10,000)

(130)

(230,096)

20,445

(192,880)

(10,000)

(498)

(182,933)

Financial instruments Interest rate and currency risk profiles The interest rate and currency profiles of the Group’s financial liabilities at 30 September were as follows: 2001 Fixed rate Variable rate £’000 £’000

No interest £’000

Total £’000

Sterling Bank term loans Floating rate guaranteed unsecured loan stock Deferred consideration

100,000 – –

94,596 10,000 –

– – 1,120

194,596 10,000 1,120

US Dollar

100,000 25,500

104,596 –

1,120 –

205,716 25,500

125,500

104,596

1,120

231,216

No interest £’000 1,300 –

Total £’000 1,300 25,370

1,300

26,670

2000

Sterling US Dollar

Fixed rate Variable rate £’000 £’000 – – 25,370 – 25,370

–

The sterling liabilities comprise the Loan stock, which bears interest at a variable rate of 1% above LIBOR to the date of repayment and the bank term loans which are repayable by six-monthly instalments over the period to 30 September 2007 (note 22). Interest on the term loans is at a variable rate of 1.25% above LIBOR but the Group has undertaken a cross-currency interest rate swap on £100 million of these amounts with the effect of fixing the interest rate at 5.03% plus the margin of 1.25%. The interest on this swap is payable in US dollars while the principal amount of the loan remains denominated in sterling. The US dollar liabilities, comprising the Convertible Loan Notes, bear interest at a rate of 7% pa, fixed to the date of the repayment or conversion (note 22). 54 Aberdeen Asset Management

The financial liabilities on which no interest is payable represent deferred considerations, £620,000 of which is due during October 2001, and £500,000 which is due in October 2002. The interest rate and currency profiles of the Group’s financial assets at 30 September were as follows: 30 September 2001

Sterling US Dollar Euro currencies Other currencies Total

30 September 2000

Total Floating rate No interest £’000 £’000 £’000 50,480 19,888 30,592 22,457 22,166 291 2,895 2,529 366 2,924 2,829 95 78,756

47,412

Total Floating rate No interest £’000 £’000 £’000 52,007 26,431 25,576 21,239 21,239 – (691) (691) – 1,388 1,300 88

31,344

73,943

48,279

25,664

The no interest financial assets do not have a maturity date. They principally comprise fixed asset investments. The floating rate financial assets principally comprise cash and deposit balances which earn interest at rates which fluctuate according to money market rates. The Group has a £10 million bank overdraft limit for the purposes of providing liquidity if exceptional levels of short term timing differences arise on unit trust settlements. This facility is reviewed on an annual basis. The fair values of the financial assets and liabilities are not materially different to their carrying amounts. The Group has an unutilised loan facility of £30 million which is available until 30 May 2002. Foreign net investment The majority of the Group’s subsidiaries use sterling as their reporting currencies. The foreign currency net monetary assets (liabilities) of subsidiaries which adopt a different reporting currency are as follows: Total Total 2001 2000 £’000 £’000 US dollar 7,137 6,782 Singapore dollar (693) 1,095 Australian dollar 1,435 – Euro currencies (161) 319 Other 557 – Financial instruments are defined in the Financial Review at page 22.

24

Provision for liabilities and charges Group At 1 October 2000 Released in the year Provided on revaluation of fixed asset investment (note 19) Arising on acquisitions Charged to profit and loss account

Group Provision for NIC Provision for Provision for on unapproved liabilities on liabilities on share options expiry of lease pension scheme £’000 £’000 £’000

At 30 September 2001

151 (92)

200 (200)

Deferred taxation £’000

– –

– – –

– – –

– 6,020 –

59

–

6,020

Company At 1 October 2000 Released in the year Provided on revaluation of fixed asset investment (note 19) Charged to profit and loss account At 30 September 2001

151 (92) – – 59

200 (200) – – –

1,103 –

1,454 (292)

1,900 (591) 1,353

1,900 5,429 1,353

3,765

Company Provision for NIC Provision for on unapproved liabilities on Deferred share options expiry of lease taxation £’000 £’000 £’000 1,100 – 1,900 1,353 4,353

Total £’000

9,844

Total £’000 1,451 (292) 1,900 1,353 4,412

Aberdeen Asset Management 55

Notes to the Accounts Deferred taxation has been fully provided for in the financial statements as follows: Group

Revaluation of fixed asset investment Deficit on defined benefit pension scheme Other timing differences

Company

2001 £’000 1,900 (1,806) 3,671

2000 £’000 – – 1,103

2001 £’000 1,900 – 2,453

2000 £’000 – – 1,100

3,765

1,103

4,353

1,100

Timing differences represent deferred taxation in respect of the profits of certain overseas subsidiary undertakings to the extent that dividends will be remitted to the UK in the foreseeable future.

25

Assets of long-term life assurance business The assets of the long-term life assurance business held to meet liabilities to policyholders, based on market values, were: Group

Listed investments Unit trusts Unlisted investments Deposits

2001 £’000 18,988 24,870 4,103 8,560

2000 £’000 16,408 33,682 3,595 11,333

56,521

65,018 Group

Analysis of long-term business account Premium income Investment income, gains and losses Claims and benefits Commission and administration

2001 £’000 188 (2,831) (5,298) (556)

2000 £’000 199 7,054 (4,583) (507)

(Decrease) increase in fund Fund brought forward

(8,497) 65,018

2,163 62,855

Fund carried forward

26

56,521

65,018

Commitments Operating leases The Group and Company have commitments for payments in the next year under operating leases which expire as follows: Motor vehicles and Land and buildings plant and equipment

Group Within one year Between two and five years After five years

Company Within one year Between two and five years After five years

56 Aberdeen Asset Management

2001 £’000

2000 £’000

2001 £’000

2000 £’000

66 609 3,512

8 177 2,949

72 116 –

3 47 –

4,187

3,134

188

50

18 44 2,834

8 44 2,402

– 6 –

– – –

2,896

2,454

6

–

27

Pension costs The Group has applied the phased transitional rules under Financial Reporting Standard 17: Retirement Benefits (“FRS 17”). The disclosures given in (a) are those required under Statement of Standard Accounting Practice 24: Accounting for pension costs, whilst disclosures required under FRS 17, to the extent not given in (a), are set out in (b). a) The Group operates two defined benefit schemes in the UK, the CGA Staff Pension Fund, and the Murray Johnstone Retirement Benefits Plan. Both schemes are closed to new membership and to future service accruals. The Group also operates three defined contribution schemes worldwide. The total contributions charged to profit in respect of the schemes operated by the Group were as follows:

a) In respect of the Group’s money purchase schemes: Pension cost charged to profit on ordinary activities b) In respect of the Group’s defined benefit schemes: Pension cost charged to profit on ordinary activities

2001 £’000

2000 £’000

3,509

1,469

494

271

CGA Staff Pension Fund The cost was based on the independent actuarial valuation carried out as at 1 January 1999, made by a qualified actuary using the Minimum Funding Requirement (“MFR”) basis. The main assumptions were: Discount rate: – before retirement 9% – after retirement 8% Pensions increases 3.5% Price inflation 4% The market value of the scheme’s assets at 1 January 1999 was £3,893,000 and the actuarial value of these assets represented 86% of the value of the benefits that had accrued to members. The Company has agreed to make contributions of £145,000 annually until 2007 to bring the scheme back to 100% funding on the MFR basis. Murray Johnstone Retirements Benefits Plan The cost was based on the independent actuarial valuation carried out as at 30 June 1999, made by a qualified actuary using the Projected Unit Method. A full actuarial valuation was carried out at 30 June 2001, by a qualified independent actuary using the Minimum Funding Requirement (“MFR”) basis. The main assumptions were: Discount rate: – before retirement 7.25% – after retirement 6.00% Pensions increases 2.75% Salary increases 4.75% Price inflation 2.75% The market value of the scheme’s assets at 30 June 2001 was £26,912,000 and the actuarial value of these assets represented 82% of the value of the benefits that had accrued to members. There is now no further accrual of benefits in the Scheme. The trustees and Company are in discussions regarding a contribution to restore the funding to 100% and a final agreement on this contribution will be made in 2002. Currently a contribution of approximately £17,000 per month is being paid. (b) A full actuarial valuation was carried out at 30 June 2001 in respect of the Murray Johnstone Retirement Benefits Plan, and updated to 30 September 2001 by a qualified independent actuary. A full actuarial valuation was carried out at 1 January 1999 in respect of the CGA Staff Pension Fund, and updated to 30 September 2001 by a qualified independent actuary. The financial assumptions used by the actuaries to calculate scheme liabilities under FRS 17 were: Murray Johnstone Retirements CGA Staff Benefits Plan Pension Fund As at 30 Sep 2001 As at 30 Sep 2001 Valuation method Projected unit Projected unit Discount rate 6.25% 6.25% Pension increases - pre July 1997 accrual 5.00% 5.00% - post July 1997 accrual 2.40% 2.40% Contributory salary increases 4.40% n/a Price inflation 2.40% 2.40%

Aberdeen Asset Management 57

Notes to the Accounts The assets in the schemes and the expected rates of return were: Equities Bonds Cash

Murray Johnstone Retirements Benefits Plan CGA Staff Pension Fund As at 30 Sep 2001 As at 30 Sep 2001 % £’000 % £’000 7.50 18,454 7.50 1,057 5.00 3,206 5.00 2,639 4.50 1,408 4.50 55

Total market value of assets Actuarial value of liabilities

23,068 (34,168)

3,751 (4,629)

Deficits in the schemes Related deferred tax assets

(11,100) 3,330

(878) 263

Net pension liabilities

(7,770)

(615)

An element of the deficit relating to the Murray Johnstone scheme was recognised at the date of acquisition of the Murray Johnstone Group. A provision of £6,020,000 (£4,214,000 net of deferred tax) was made at this time, and is included within “Provisions for liabilities and charges” (note 24). Net assets Reserves Effect on Consolidated Group Balance Sheet £’000 £’000 Excluding pension liabilities 217,920 8,811 Pension liability (4,171) (4,171) Including pension liabilities 28

213,749

4,640

Related party transactions During the year the Group managed assets, in the ordinary course of business, on behalf of the Scottish Provident Institution (“SPI”). Under the terms of the investment management agreement the Group earned fees totalling £12,787,000 (2000 – £13,642,000), calculated on a monthly basis according to the value of assets under management. The assets managed include investments in the Aberdeen range of unit trusts and, to the extent that the fees earned from those unit trusts exceed the fee to which the Group is entitled under the terms of the agreement, the excess is repaid to SPI. As at 30 September 2001 amounts totalling £503,000 (2000 – £744,000) were due to SPI, and are included within creditors. Until 30 September 2000, Phoenix Investment Partners (“PIP”), a subsidiary of The Phoenix Companies Inc, (“Phoenix”), managed the Group’s £628m US equity assets under management. From 1 October 2000 the management of these assets was substantially taken in house. PIP continued to manage assets on behalf of the Group to a lesser extent, and during the year the value of the assets managed by PIP amounted to £69m. PIP earned fees totalling £119,000 (2000 – £838,000) based on the value of assets managed, calculated on a monthly basis. Also, the Group are sub advisors to the £264m (2000 – £436m) international and global portfolio managed by PIP. During the year the Group earned £1,153,000 (2000 – £1,442,000) in sub-advisory fees which are based on the average value of the assets managed. As at 30 September 2001 the total amount due by PIP to the Group amounted to £69,000 (2000 – £116,000), and is included in debtors. Phoenix has a substantial interest in the Company, as disclosed in the Directors’ Report on page 25. SPI was also a substantial shareholder in the Company until 3 May 2001 when it disposed of its shareholding under an institutional placing.

29

Post balance sheet events On 12 December 2001 the Company entered into a conditional contract for the acquisition of the entire issured share capital of Old Mutual International (Isle of Man) Limited (“OMI”) and related companies, for a cash consideration of £36.2 million, comprising £15.4 million for net assets and £20.8 million for the embedded value. OMI is a life assurance company which has been closed to new business since 1998 and has policyholder funds of approximately £300 million. On 12 December 2001 the Company announced that it was raising £97 million (net of expenses) from the issue of 5.875% Convertible Bonds. The proceeds raised from this issue will be used to finance the OMI transaction, to repay £25 million of bank debt, to pursue additional complementary acquisitions and strategic opportunities and for general corporate purposes.

58 Aberdeen Asset Management

Five Year Summary 1997

1998

1999

2000

2001

£’000

£’000

£’000

£’000

£’000

22,307

48,482

62,718

115,721

182,094

(15,990) (238) (2,221)

(34,763) (262) (4,752)

(45,517) (820) (533)

(80,245) (1,251) –

(123,192) (12,610) (10,963)

(18,449)

(39,777)

(46,870)

(81,496)

(146,765)

6,317 (2,459)

13,719 (5,014)

17,201 (1,353)

35,476 (1,251)

58,902 (23,573)

3,858 (387)

8,705 (41)

15,848 (540)

34,225 (264)

35,329 (10,740)

3,471 (1,278)

8,664 (2,597)

15,308 (4,817)

33,961 (9,835)

24,589 (9,599)

Profit for the financial year Minority interests - equity

2,193 (4)

6,067 –

10,491 –

24,126 –

14,990 (29)

Profit attributable to shareholders Dividends Equity dividends on ordinary shares Non-equity dividends on redeemable preference shares

2,189

6,067

10,491

24,126

14,961

(3,286) –

(6,630)

(8,508) –

(14,679) –

(17,582) (1,265)

(3,286)

(6,630)

(8,508)

(14,679)

(18,847)

(1,097)

(563)

1,983

9,447

(3,886)

4.49p 2.50p

6.52p 4.14p

7.77p 6.98p

16.48p 15.67p

21.12p 8.51p

Before goodwill amortisation and exceptional costs After goodwill amortisation and exceptional costs

4.61p 3.02p

6.36p 4.28p

7.60p 6.89p

15.44p 14.71p

19.49p 8.26p

Dividend per ordinary share

3.75p

4.50p

5.50p

9.50p

10.50p

£11.7bn

£13.1bn

£16.1bn

£21.9bn

£34.7bn

Turnover Operating expenses Amortisation of goodwill Exceptional costs Total administrative expenses Operating profit before goodwill amortisation and exceptional costs Amortisation of goodwill and exceptional costs Operating profit Net interest payable Profit on ordinary activities before taxation Tax on profit on ordinary activities

Retained (loss) profit for financial year

Earnings per share – basic Before goodwill amortisation and exceptional costs After goodwill amortisation and exceptional costs Earnings per share – diluted

Assets under management at year end

Turnover and operating profit arose wholly from continuing activities.

Aberdeen Asset Management 59

Notice of Meeting Notice is hereby given that the nineteenth Annual General Meeting of the Company will be held at One Albyn Place, Aberdeen, AB10 1YG, at 12.30pm on Friday 18 January 2002 for the following purposes: 1.

To receive the Directors’ Report and Accounts for the year ended 30 September 2001, together with the Auditors’ report thereon.

2.

To declare a final dividend of 6.65 pence per ordinary share.

3.

To reappoint KPMG Audit Plc as Auditors and to authorise the Directors to agree their remuneration.

4.

To elect as a Director Mr J Solan who was appointed during the year.

5.

To elect as a Director Mr J L Wybrew who was appointed after the year-end.

6.

To elect as a Director Mrs K L Garrett-Cox who was appointed after the year-end.

7.

To re-elect as a Director Mr C D Fishwick who retires by rotation.

8.

To re-elect as a Director Mr C M Gilchrist who retires by rotation.

9.

To re-elect as a Director Mr B Hendry who retires by rotation.

10.

To re-elect as a Director Mr W J Rattray who retires by rotation.

11.

To approve the Remuneration Report.

12.

To consider the following resolution, to be put to shareholders as an Ordinary Resolution: “That the authorised share capital of the Company be increased from £64,000,000 to £75,000,000 by the creation of 110,000,000 new ordinary shares of 10 pence each ranking pari passu for all purposes with the ordinary shares already in issue.”

13.

To consider the following resolution, to be put to shareholders as an Ordinary Resolution: “That the Directors be and are hereby generally and unconditionally authorised for the purpose of Section 80 of the Companies Act 1985 (“the Act”) to exercise all the powers of the Company to allot relevant securities (as defined in Section 80(2) of the Act) up to an aggregate nominal amount of £5,778,309 representing 33% of the present issued ordinary share capital provided that this authority shall expire (unless previously reviewed, varied or revoked by the Company in general meeting) at the next Annual General Meeting of the Company (the “Section 80 period”) save that the Company may prior to the expiry of the Section 80 period make an offer or agreement which would or might require relevant securities to be allotted after the Section 80 period and the Directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred by this resolution had not expired.

14.

To consider the following resolution, to be put to shareholders as a Special Resolution: That the Directors be and they are hereby empowered pursuant to Section 95 of the Act to allot and make offers or agreements to allot equity securities (as defined in Section 94(2) of the Act) for cash during the period (the “Section 89 period”) up to the next Annual General Meeting of the Company as if Section 89(1) of the Act did not apply to any such allotment, provided that this power shall be limited to (i) the allotment of up to an aggregate nominal amount of £875,501 representing 5% of the present issued ordinary share capital and (ii) the allotment of equity securities pursuant to a rights issue, but so that the directors may, at any time prior to the expiry of the Section 89 period, make an offer or agreement which would or might require equity securities to be allotted after the expiry of the Section 89 period and the Directors may allot equity securities in pursuance of such an offer or agreement as if the power had not expired.

By order of the Board

Brian Ross Secretary One Albyn Place Aberdeen, AB10 1YG

60 Aberdeen Asset Management

18 December 2001